Economy continues two headed recovery while income grows and spending drops: Personal income increased sharply in January by 1%

Our economy continued its faustian bargain, income grew significantly while spending sharply slowed. Inflation remains psychitzophrenic on two tracks with headline numbers outpacing the core. Personal income in January increased 1.0%, following a 0.4% gain the month before. Year on year, personal income for January was up 4.6%.

Consumer spending for the latest month was led by cars and gas

On inflation, the PCE price index rose 0.3%. Core inflation rose 0.1%, compared to no change in December. On a year-ago basis, headline PCE prices are up 1.2% in January-the same rate as in December. Core inflation held steady at 0.8% year-on-year versus in December. Via BEA:

Personal income increased $133.2 billion, or 1.0%, and disposable personal income (DPI) increased $78.3 billion, or 0.7%, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $23.7 billion, or 0.2%. In December, personal income increased $56.6 billion, or 0.4%, DPI increased $48.5 billion, or 0.4%, and PCE increased $56.5 billion, or 0.5%, based on revised estimates.

Real disposable income increased 0.4% in January, compared with an increase of 0.1% in December. Real PCE decreased 0.1%, in contrast to an increase of 0.3%.

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