Briefing.com


March Personal Income and Spending

Updated 25-May-11 21:12 ET








Highlights

  • The data in the personal income and spending report for March were incorporated in the first quarter GDP report.
     
    After increasing 0.4% in February, personal income increased 0.5% in March. The Briefing.com consensus expected income growth of 0.4%.
     
    Personal spending increased 0.5% in March after increasing an upwardly revised 0.9% (from 0.5%) in February. The consensus expected spending to increase 0.5%.

Key Factors

  • Absent any revisions for January and February, simple calculations from the GDP release suggested that income increased 0.7% and spending rose 1.6% in March. However, the combined January and February income and spending levels were revised up only 0.1% and 0.3%, respectively. As a result, the March income and spending levels were weaker than the back-of-the envelope calculations from the GDP report suggested.
     
    Core PCE prices increased 0.1% in March, exactly what the consensus expected. Over the last 12 months, core prices have only increased 0.9% and remain well below the Fed target level of 1.5% - 2.0%. There is no indication that inflation pressures will force the Fed to start a tightening cycle anytime soon.

Big Picture

  • A temporary spike in inflation has mitigated much of the increase in spending. Inflation is expected to stabilize and consumption growth will return.

Category MAR FEB JAN DEC NOV
Personal Income
Total Income 0.5% 0.4% 1.2% 0.5% 0.3%
  Wage and Salary 0.3% 0.4% 0.4% 0.3% 0.0%
Disposable Income 0.6% 0.4% 0.8% 0.5% 0.3%
Savings Rate 5.5% 5.5% 5.9% 5.6% 5.5%
Personal Consumption
Total (Nominal) 0.6% 0.9% 0.5% 0.4% 0.3%
Total (Real, Chain $) 0.2% 0.5% 0.1% 0.1% 0.3%
Core PCE Deflator
Month/Month 0.1% 0.2% 0.2% 0.0% 0.1%
Year/Year 0.9% 0.9% 0.8% 0.7% 0.8%