Friday, March 29, 2013

Personal Income increased 1.1% in February, Spending increased 0.7%

by Calculated Risk on 3/29/2013 08:46:00 AM

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

Personal income increased $143.2 billion, or 1.1 percent ... in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $77.2 billion, or 0.7 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.3 percent in February, the same increase as in January. ... PCE price index -- The price index for PCE increased 0.4 percent in February, compare with an increase of less than 0.1 percent in January. The PCE price index, excluding food and energy, increased 0.1 percent, compared with an increase of 0.2 percent.
...
Personal saving -- DPI less personal outlays -- was $310.9 billion in February, compared with $262.5 billion in January. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 2.6 percent in February, compared with 2.2 percent in January.
The following graph shows real Personal Consumption Expenditures (PCE) through February (2005 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. Both income and spending were above expectations in February, although some of the increase in spending was related to higher gasoline prices.

Using the two-month method to estimate Q1 PCE growth (first two months of the quarter), PCE was increasing at a 3.5% annual rate in Q1 2013 (using mid-month method, PCE was increasing at 3.2% rate). This suggests upward revisions to Q1 GDP forecasts.