The Bureau of Economic Analysis said that personal income and spending rose modestly in January, up 0.3 percent and 0.2 percent respectively. This is the second consecutive month of gains in personal income; however, real disposable income in January fell by 0.1 percent. Personal spending, which was flat in December, rose on higher goods purchases. The consumption of services was unchanged.
Durable goods purchases increased 0.9 percent, building on December’s 0.5 percent jump. Meanwhile, nondurable spending was up 0.4 percent, a reversal from the declines of November and December. Over the course of the past year, personal consumption has risen 3.8 percent. This is a slower rate than the 4.4 percent growth between January 2010 and January 2011, but still a positive trend.
Manufacturing sector wages increased by $7.9 billion for the month to $730.3 billion, its third consecutive month of gains. The savings rate is currently 4.6 percent, slightly lower than the 4.7 percent rate of December. (Note that some of the data, including the savings rate, were revised upward from previous reports due to the inclusion of additional information. The December savings rate, for instance, was originally reported to be 4.0 percent.)
Overall inflation appears to be modest, with the personal consumption expenditures deflator up 0.2 percent for January. On an annual basis, this suggests consumer inflation of 2.4 percent, or 1.9 percent if food and energy costs are excluded. Prices were nondurable goods increased 4.5 percent year-over-year, reflecting some easing from past months. Whereas, durable goods were 0.4 percent lower than they were this time last year.
Chad Moutray is chief economist, National Association of Manufacturers.