Friday, September 29, 2017

Personal Income increased 0.2% in August, Spending increased 0.1%

by Bill McBride on 9/29/2017 08:35:00 AM

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

Personal income increased $28.6 billion (0.2 percent) in August according to estimates released today by the Bureau of Economic Analysis ... personal consumption expenditures (PCE) increased $18.0 billion (0.1 percent).
...
Real PCE decreased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
The August PCE price index increased 1.4 percent year-over-year and the August PCE price index, excluding food and energy, increased 1.3 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2017 (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.

The increase in personal income was below expectations,  and the increase in PCE was at expectations.

Using the two-month method to estimate Q3 PCE growth, PCE was increasing at a 1.7% annual rate in Q3 2017. (using the mid-month method, PCE was increasing 1.0%). This suggests sluggish PCE growth in Q3.