BEA: Personal Income and PCE

According to a report released Friday from the Bureau of Economic Analysis, real personal income decreased $29.1 billion, or 0.2%, in February versus a consensus expected decline of 0.1%. Personal consumption expenditures (PCE) increased $17.2 billion, or 0.2%, matching expectations. February marks the second PCE increase after six consecutive monthly declines. For the quarter so far, real spending is up 1.3% annual rate.

The overall PCE deflator (consumer inflation) increased 0.3% in February and is up 1.0% YoY basis. The core PCE deflator (food + energy excluded), was up 0.2% in February and is up 1.8% compared to a year ago.

Real disposable income (income after taxes) decreased $10.5 billion, or 0.1%, in February. Not a very positive sign when considering disposable income is the main driver of spending.

After adjusting for inflation, real consumption was down 0.2% in February following January’s 0.7% rise. Real spending on autos & parts fell 3.9% last month. Wages & salaries further reflected the weak job market with a decrease of nearly $30 billion in February.

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