U.S. Personal Income and Outlays – Sept 2017

Released Monday, October 30, 2017

downloadsPersonal Income: +0.4% month-over-month (Cons: +0.4%), +3.0% year-over-year
Personal Consumption Expenditures: +1.0% month-over-month (Cons: +0.9%), +4.4% year-over-year
Core PCE Price Index: +0.1% month-over-month (Cons: +0.1%), +1.3% year-over-year
Savings Rate: 3.1%, -0.5 percentage point (ppt) month-over-month

Quick Take:
Personal income rose a healthy 0.4% in September compared to August. Personal income growth is up 3.0% year-over-year, as weak personal income data in October and November 2016 is weighing on the annual personal income growth calculation. When looking to wages and salaries, which make up ≈60% of personal income, growth is stronger, up 3.2% year-over-year and up 4.4% at an annualized rate over the last six months. Solid wages and salaries growth appear to be supportive of continued healthy personal income growth in the future.

Nominal personal consumption rose 1.0% month-over-month in September after rising only 0.1% month-over-month in August. Nominal personal consumption growth in September was driven by motor vehicles and parts consumption, which rose 9.7% month-over-month, the highest monthly growth rate since March 2010 aided in part by this year’s hurricanes’ negative impact on August auto sales . Strong auto sales data in September supported the strength in motor vehicles and parts consumption. Real personal consumption rose 0.6% month-over-month and was up 2.7% year-over-year as of September.

September’s Real personal consumption data was included in the Advance Estimate for Q3 Real GDP that was issued on Friday, October 27.

Regarding inflation, month-over-month growth for the core PCE price index remained subdued at 0.1% growth in September. Year-over-year growth remained at 1.3% in September, down from 1.4% in July and down from 1.9% as of February 2017. The deceleration is partly attributable to negative month-over-month growth in March due to a sharp decline in telecom services. We view the drag from telecom services as noise in an otherwise modestly inflationary environment.