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Friday, October 30, 2009

September PCE and Saving Rate

by Calculated Risk on 10/30/2009 08:38:00 AM

From the BEA: Personal Income and Outlays, September 2009

Personal income decreased $0.1 billion, or less than 0.1 percent, and disposable personal income (DPI) decreased $0.2billion, or less than 0.1 percent, in September, according to the Bureau of Economic
Analysis. Personal consumption expenditures (PCE) decreased $47.2 billion, or 0.5 percent.
Real DPI -- DPI adjusted to remove price changes -- decreased 0.1 percent in September, compared with a decrease of 0.2 percent in August.

Real PCE -- PCE adjusted to remove price changes -- decreased 0.6 percent in September, in contrast to an increase of 1.0 percent in August.
Personal saving -- DPI less personal outlays -- was $355.6 billion in September, compared with $307.0 billion in August. Personal saving as a percentage of disposable personal income was 3.3 percent in September, compared with 2.8 percent in August.
Personal Saving RateClick on graph for large image.

This graph shows the saving rate starting in 1959 (using a three month centered average for smoothing) through the September Personal Income report. The saving rate was 3.3% in September. (3.1% with three month average)

Although the saving rate declined in Q3, households are still saving more than during the last few years (when the saving rate was around 1.0%). The saving rate will probably continue to rise as households save more to repair their household balance sheets (and because an aging population usually pushes the saving rate higher) This increase in the saving rate - if it happens as expected - will keep pressure on personal consumption expenditures for the next year or two.