by Calculated Risk on 12/23/2009 08:30:00 AM
Wednesday, December 23, 2009
November PCE and Saving Rate
From the BEA: Personal Income and Outlays, November 2009
Personal income increased $49.7 billion, or 0.4 percent, and disposable personal income (DPI) increased $54.1 billion, or 0.5 percent, in November, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $47.9 billion, or 0.5 percent.
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Real PCE -- PCE adjusted to remove price changes -- increased 0.2 percent in November, compared with an increase of 0.4 percent in October.
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Personal saving -- DPI less personal outlays -- was $525.1 billion in November, compared with $516.7 billion in October. Personal saving as a percentage of disposable personal income was 4.7 percent in November, the same as in October.
![Personal Saving Rate](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXitBgZXpJs9OVl4gibFtmXGrU4Cnsk3JVkcWPIgenPfq4LCUi5LyKWlUmyx0V38xyJujrYvUvsOEoJ17MJWgSO8UTwPAXoaKdB1JHEzxv9VYXiMHBAaecxbh4qS6qi9PDhz6Q/s320/PersonalSavingNov2009.jpg)
This graph shows the saving rate starting in 1959 (using a three month centered average for smoothing) through the November Personal Income report. The saving rate was 4.7% in November.
I expect the saving rate to continue to rise - possibly to 8% or more - slowing the growth in PCE.
The following graph shows real Personal Consumption Expenditures (PCE) through November (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.
![PCE](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTTDUQlS1tLI4vzXEA2u_M_R_kdYjWBM8pMxHkfRMmuiUnux8_x9h8fkBa2vEBPJ9Muq_lAuNtQYf0l8dxgLnJhnRGaw3YMn3GYrgYN5bZg6MNsmKopp940wMX-rPSIxOt4n19/s320/PCENovember.jpg)
The colored rectangles show the quarters, and the blue bars are the real monthly PCE.
Using the two-month method for estimating Q4 PCE growth gives an estimate of just under 1%. However - note that PCE in August was distorted by the cash-for-clunkers program. So my guess is PCE growth in Q4 will be around 1.7%.