Friday, December 21, 2018

Personal Income increased 0.2% in November, Spending increased 0.4%

by Bill McBride on 12/21/2018 10:11:00 AM

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

Personal income increased $40.2 billion (0.2 percent) in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $37.8 billion (0.2 percent) and personal consumption expenditures (PCE) increased $54.4 billion (0.4 percent).

Real DPI increased 0.2 percent in November and real PCE increased 0.3 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
The November PCE price index increased 1.8 percent year-over-year and the September PCE price index, excluding food and energy, increased 1.9 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through November 2018 (2012 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 above expectations.

Using the two-month method to estimate Q4 PCE growth, PCE was increasing at a 3.6% annual rate in Q4 2018. (using the mid-month method, PCE was also increasing at 3.6%). This suggests solid PCE growth in Q4.