January 2012 Personal Expenditures Unchanged, But Income Falls

by Steven Hansen

January 2012 Real Personal Consumption Expenditure (PCE) – the inflation adjusted spending of consumers was unchanged month-over-month, but Disposable Personal Income (DPI) declined slightly:

• Real PCE (inflation and seasonally adjusted) unchanged 0.0% month-over-month
• Real DPI rose (inflation and seasonally adjusted) down 0.1% month-over-month
• the personal savings rate (expressed as a percentage of DPI) fell 0.1% to 4.6%
• The market looks at current values (not real) expecting a PCE rise of 0.2% (versus 0.2% actual), and a rise in DPI of 0.4% (versus 0.3% actual).

Overall, this data seems mixed.  On the bright side, the downward year-over-year trend in Real PCE was broken this month – it means the improvements had been growing at a “less good” rate but have now stabilized, at least for this month.  Econintersect believes year-over-year trends are very revealing in understanding economic dynamics.  There was a broad, and in places significant, revision this month in the data for the last six months, which is explained below (see caveats below).

Read more: http://econintersect.com/wordpress/?p=19483