Personal Income Unchanged; Consumption Up 0.3 Percent; PCE Deflator Unchanged

In February, personal income was unchanged. Wages and salaries were also unchanged as labor markets continue to be weak. Despite the lack of growth over the month, incomes were still up 2.0 percent from a year prior. Most of this increase over the past year though has been due to a large rise in transfer payment income. Non transfer income was flat on a year-ago basis.

Despite the lack of income growth, personal consumption rose 0.3 percent over the month. This was the fifth consecutive increase though the smallest of them. From a year prior, consumption was up 3.4 percent. Consumers are again starting to increase their consumption at faster rates than their incomes. Therefore, the savings rate has trended downward in recent months, now sitting at 3.1 percent in February. This is down from a recent high of 5.9 percent last May and 4.0 percent as recently as December.

As measured by the PCE deflator there was no price inflation over the month. Therefore, real incomes and real consumption were the same as the nominal numbers. From a year prior, the PCE deflator rose 1.8 percent. As recently as September, the year-over-year change had been negative. Therefore, from a year prior, real income was up 0.2 percent while real consumption was 1.6 percent higher. The core PCE deflator, which excludes energy and food prices, was unchanged month-over-month and was 1.3 percent higher from a year prior.

m/m % change	Feb	Jan	Dec	Nov	Oct	Sep
Personal Consumption	0.3	0.4	0.4	0.5	0.6	-0.6
Real	0.3	0.2	0.2	0.3	0.3	-0.7
Personal Income	0.0	0.3	0.4	0.4	0.2	0.1
Real	0.0	0.1	0.2	0.2	-0.1	0.0
PCE Deflator	0.0	0.2	0.2	0.2	0.3	0.1
Core PCE Deflator	0.0	0.0	0.1	0.1	0.3	0.1
Savings Rate (level)	3.1	3.4	4.0	3.8	3.9	4.2

10.03.29 (Source: Bureau of Economic Analysis)