Monday, December 23, 2013

Personal Income increased 0.2% in November, Spending increased 0.5%

by Bill McBride on 12/23/2013 08:53:00 AM

The BEA released the Personal Income and Outlays report for November:

Personal income increased $30.1 billion, or 0.2 percent ... in November according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $63.0 billion, or 0.5 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.5 percent in November, compared with an increase of 0.4 percent in October. ... The price index for PCE increased less than 0.1 percent in November, in contrast to a decrease of less than 0.1 percent in October. The PCE price index, excluding food and energy, increased 0.1 percent in November, the same increase as in October.
On inflation, the PCE price index decreased at a 0.3% annual rate in October, and core PCE prices increased at a 1.2% annual rate.  This is very low and far below the Fed's 2% target.

The following graph shows real Personal Consumption Expenditures (PCE) through November 2013 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Personal Consumption Expenditures Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Using the two-month method to estimate Q4 PCE growth (first two months of the quarter), PCE was increasing at a 4.1% annual rate in Q4 2013 (using mid-month method, PCE was increasing at 4.6% rate).   This suggests solid PCE growth in Q4.