US Personal Spending Rises the Most in 8 Years

Personal spending in the US jumped 1 percent month-over-month in September of 2017, after edging up 0.1 percent in August and beating market expectations of a 0.8 percent rise. It is the biggest gain in personal consumption since August of 2009, mainly boosted by auto sales and utilities as households recover from the damages caused by Hurricanes Harvey and Irma.

Personal consumption expenditure (PCE) increased $136 billion. Real PCE went up $76.0 billion due to a rise of $59.1 billion in spending for goods and a $21.6 billion increase in spending for services. Consumption rebounded for durable goods (3.2 percent compared to -1.5 percent in August) and rose faster for nondurables (1.5 percent compared to 0.8 percent) and services (0.5 percent compared to 0.2 percent). Within goods, new motor vehicles was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household utilities. 

Personal income went up 0.4 percent or $66.9 billion, higher than 0.2 percent in August and in line with market expectations. It primarily reflected increases in wages and salaries and nonfarm proprietors’ income. Personal outlays increased $132.5 billion in September. Personal saving was $441.9 billion in September and the personal saving rate was 3.1 percent. Disposable personal income (DPI) increased $53.0 billion (0.4 percent). 

The core personal consumption expenditures price index, the Fed’s preferred inflation gauge which excludes volatile food and energy prices, rose 0.1 percent month-on-month, in line with estimates and the same as in the previous four months. Year-on-year, it was up 1.3 percent, following a 1.3 percent rise in August and remaining the lowest annual rate since November of 2015.

US Personal Spending Rises the Most in 8 Years

BEA | Joana Taborda |
10/30/2017 12:49:40 PM