US Personal Spending Rebounds Less than Expected

Personal spending in the United States edged up 0.1 percent from a month earlier in January, after falling 0.6 percent in December, the most in a decade. The latest reading came in below market expectations of a 0.3 percent gain, as an increase in consumption of nondurables and services offset a sharp decline in durables spending.

Due to the recent partial government shutdown, this report combines estimates for January and February 2019. January estimates include both personal income and outlays measures, while February estimates are limited to personal income. Estimates of outlays for February will be available with the next release on April 29, 2019, according to the source.

Personal Income and Outlays, January 2019

Personal consumption expenditures (PCE) rose by $8.6 billion, or 0.1 percent, in January, following a revised $81.5 billion decline, or 0.6 percent, in December. The increase in consumer spending, which accounts for more than two-thirds of US GDP, was due to consumption of nondurable goods (0.3 percent vs -2.2 percent in December) and services (0.2 percent vs 0.3 percent). By contrast, spending on durable goods continued to fall (-1.2 percent vs -2.9 percent).

Real PCE increased $15.6 billion, or 0.1 percent, which reflected a $20.8 billion increase in spending for services that was partially offset by a decrease of $7.7 billion in spending for goods. Within services, the largest contributor to the increase was spending for financial services and insurance. Within goods, new motor vehicles was the leading contributor to the decrease.

Personal income fell $22.9 billion, or 0.1 percent, in January, due to decreases in personal dividend income, farm proprietors’ income, and personal interest income that were partially offset by increases in social security benefit payments (related to cost of living adjustments) and other government social benefits to persons, which includes the Child Tax Credit and the Affordable Care Act refundable tax credit.

Disposable personal income dropped $34.9 billion, or 0.2 percent, and real DPI also decreased 0.2 percent. The PCE price index decreased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

Personal outlays increased $6.3 billion in January. Personal saving was $1.19 trillion in January and the personal saving rate, personal saving as a percentage of disposable personal income, was 7.5 percent.

Personal Income, February 2019

Personal income increased $42.0 billion, or 0.2 percent, in February, boosted by wages and salaries, government social benefits to persons, and proprietors’ income, which were partially offset by a decrease in personal interest income.

Disposable personal income (DPI) increased $31.3 billion, or 0.2 percent.

 US Personal Spending Rebounds Less than Expected

BEA | Joana Ferreira |
3/29/2019 1:00:08 PM