–Pvt Wages +$29.1b vs -$1.4b in Nov; Core Prices +1.8% YOY; Saving 4.0%
By Joseph Plocek
WASHINGTON (MNI) – The U.S. December Personal Income report
suggests caution in consumer spending that should give analysts pause in
predicting a big growth pickup ahead.
December Personal Income printed +0.5% in its largest gain since
February, but Personal Consumption Expenditures were flat. Consumers
saved and rising prices cut into real spending.
Core PCE prices posted +0.2% for +1.8% over the year.
These data are already incorporated into Q4 GDP but the pattern is
news: real PCE printed -0.1% in December after +0.1% in November and
+0.1% in October. This shows weaker spending as all categories fell in
December with higher prices.
December real spending fell the most in services at -$4.1 billion.
Services spending has become unstable, declining in two of the last
four months, perhaps reflecting an altered pattern of utilities spending
as global warming and commodities price fluctuations have changed usage.
But real durables, nondurables, and services spending all printed -0.1%
in December.
Private wages advanced $29.1 billion as manufacturing and services
wages rose. This compares to -$1.4 billion in November and +$41 billion
in October after revision, continuing the recent seesaw pattern.
Proprietors’ income, rents, transfers and income receipts rose.
Social Security was boosted $7.1 billion by a recalculation of earnings
for recent retirees.
Savings surged because income was not spent, perhaps a reaction to
the up-down pattern in private wages. The savings rate was 4.0% in
December.
For all 2011, income was up 4.7% and PCE also +4.7% in their
biggest gains since 2007. The year’s savings rate was 4.4%.
Looking ahead, January should see more buying if wages steady.
However, this might not portend a strong growth period as saving appears
elevated and rising prices again cut into real growth.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
