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US Personal Income and Spending report for December came in better than feared Friday. Personal income increased 0.6% m/m in December higher than the consensus 0.1% and rebounding from a revised 1.3 percent slump in November. Personal spending declined 0.2% versus consensus -0.5%. Investors came away with a sense of relief.

Marilyn Monrow Tiffanys

Personal Income

The increase in increase came from increases in government social benefits, by a 0.5% increase compensation from a 0.5% increase in wages and salaries and personal dividend income. At the same time, proprietors’ income decreased.

United States Personal Income

For investors the report was a sense of reliefis that it wasn't as bad as feared.

  • Personal current transfer receipts increased 2.3% after declining 3.5% in November.
  • The personal savings rate as a percentage of disposable income increased to 13.7% from 12.9% in November.
  • Real disposable personal income was up 3.3% yr/yr, versus 2.8% in November.
  • Real personal spending declined 3.3% yr/yr following a 2.7% decline in November.

Personal Spending

Personal spending in the US fell 0.2 percent month-over-month in December of 2020, following an upwardly revised 0.7 percent drop in November and compared to market forecasts of a 0.4 percent fall as rising coronavirus infections led to more business and activity restrictions and more job losses.

Decreases seen in purchases of recreational goods and vehicles, food and beverages, food services and hospitals were partly offset by an increase in spending for motor vehicles and parts, namely new light trucks and electricity.

United States Personal Spending

Personal Consumption Expenditure (PCE)

The PCE Price Index was up 0.4% m/m v consensus 0.3% and the core PCE Price Index was up 0.3% v consensus 0.1%.  Year-on-year, the PCE price index advanced 1.3 percent and the core index increased 1.5 percent.

PCE

United States Personal Consumption Expenditure Price Index

Core PCE

United States Core Personal Consumption Expenditure Price Index

Core PCE prices excludes food and energy rose 0.3 percent over a month earlier in December of 2020. Year-on-year, core PCE prices increased 1.5 percent, following a 1.4 percent increase in November.

Source: U.S. Bureau of Economic Analysis

From The Traders Community News Desk

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