Friday, March 28, 2014

Personal Income increased 0.3% in February, Spending increased 0.3%

by Bill McBride on 3/28/2014 08:44:00 AM

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

Personal income increased $47.7 billion, or 0.3 percent ... in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $30.8 billion, or 0.3 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.2 percent in February, compared with an increase of 0.1 percent in January. ... The price index for PCE increased 0.1 percent in February, the same increase as in January. The PCE price index, excluding food and energy, increased 0.1 percent in February, the same increase as in January.
The following graph shows real Personal Consumption Expenditures (PCE) through February 2014 (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 Q1 PCE growth (first two months of the quarter), PCE was increasing at a 1.3% annual rate in Q1 2014 (using mid-month method, PCE was increasing less than 1.0%).   This suggests weak PCE growth in Q1, but I expect PCE to increase faster in March.

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