U.S. Personal Income and Spending

TD Economics

Data Release: Consumers keep on spending in November, but lack of income gains a concern

  • Personal income remained unchanged in November, disappointing expectations for a 0.3% gain. Removing inflation and taxes, real disposable income fell -0.1% on the month.
  • However, that didn't stop Americans from spending. Personal consumption rose 0.2% in nominal terms, just a tick below consensus, but it comes off of an upwardly revised October tally.
  • In real terms spending rose a slight 0.1%, following a 0.1% gain in October. The story was a rebound in real spending on services, likely reflecting a return to more seasonal temperatures raising utilities consumption. Real spending on durable goods fell slightly, after two very strong months of growth.
  • The combination of higher spending and flat income saw the savings rate fall to 5.5% The personal savings rate has been trending down through 2016, after creeping up through 2015. As of November it is roughly back in line with its pre-oil price collapse levels.
  • Inflation, as measured by the year-on-year change in the personal consumption deflator, remained unchanged at 1.4%. Core PCE inflation (ex food & energy) lost a step, and now sits at 1.6%, below the Fed's 2% target.

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