Personal Income, Savings Rise in March

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The US Bureau of Economic Analysis (BEA) released its report for March personal income and outlays this morning, showing that Americans got a bit of an income boost in March, but that they chose to save rather than spend.

Personal income was up 0.4% in March and disposable personal income (income after taxes) was also up 0.4%. Spending rose 0.3% in March. In February, personal income rose 0.3% and disposable income rose by 0.2%, while spending rose 0.9%. The savings rate in March rose from 3.7% in February to 3.8%. The February savings rate was the lowest since the recession ended.

Real (adjusted for inflation) income increased 0.2% in March, much better than the -0.1% decrease in February. Real spending rose 0.1%, compared with an increase of 0.5% in February.

The personal consumption expenditure (PCE) price index rose 0.2% in March, a bit lower than the rise of 0.3% in February. Core PCE, which excludes food and energy, rose 0.2% in Mrch, compared with a 0.1% rise in February. The core PCE index was in-line with expectations.

The big takeaways here have to be that spending is moderating once again, indicating that demand is softening and that employment numbers could be about to take another hit. Moderating gasoline prices didn’t really take hold until this month, and the drop, about $0.10/gallon in the past 30 days, could loosen up Americans’ spending again.

Inflation, as measured by the core PCE index, is running at an annual rate of 2%, which should keep the inflation hawks quiet, but probably won’t.

The BEA’s report is available here.

Paul Ausick