–Pvt Wages +$25.5b vs +$29.9b in Dec; Core Prices +1.9% YOY
By Joseph Plocek
WASHINGTON (MNI) – The U.S. January Personal Income report was
weak, as predicted by a slowing in the income measures in December. It
suggests a moderation in real growth in Q1 from the +3.0% of Q4.
January Personal Income printed +0.3%, Personal Consumption
Expenditures +0.2%, and Core PCE prices +0.2% for +1.9% over the year.
The large gain in prices left real PCE unchanged. These data are
weaker than expected.
Private wages and salaries posted +$25.5 billion as manufacturing
and services wages rose again. This compared to +$29.9b in December,
continuing a pattern of recent gains that were boosted by Q3’s
up-revision to wages in the GDP data.
Proprietors’ income, rents, transfers and income receipts all rose,
contributing to income.
Many special factors altered disposable incomes. Federal pay raises
for the military and Cost of Living Adjustments in social programs
added, tax credits expired, and an annual Social Security base
adjustment rose. Still, the Commerce Department said this was all usual
for January.
Savings dipped from the December pace and the savings rate was 4.6%
versus 4.7% previously. The savings ratio was revised higher from prior
reports, and shows that some of the increasing income is being put away.
Elevated savings may be one permanent effect of the financial recession.
Flat real PCE in January gives a poor start to the Q1 GDP path. It
suggests a slowing in real growth to +2% or less. Caution in consumer
spending should give analysts pause in predicting a big growth pickup in
the remaining months of Q1.
The breakdown of real spending shows +0.9% for durables as autos
continued to sell briskly, flat nondurables, and -0.1% for services. The
latter could reflect the mild winter as utilities costs declined.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
