–Private Wages +$16.4b vs +$16.7b in Jan; Savings Rate 5.8% vs 6.1%
By Joseph Plocek
WASHINGTON (MNI) – The February Personal Income report was about as
expected, but its details were so modest that it raises the hurdle for
Q1 real growth to exceed +3%.
February Personal Income printed +0.3%, Personal Consumption
Expenditures +0.7% (same gain as in October and the best pace since
August 2009), and PCE core prices +0.2% for +0.9% over the year. Prices
remain at recent lows: the next-lowest over-the-year pace for core
PCE prices was +1.1% in September 2010.
February real PCE was up just 0.3% after being flat in January, so
the Q1 average is growing at just about +1%. That is a weak pace that
suggests sluggish GDP growth.
Real outlays were up in all areas but were led by +1.4% in durables
as auto sales jumped. Services spending were almost flat for a second
month, suggests if there are cut-backs they center in luxuries.
Private wages advanced $16.4 billion in February after +$16.7
billion in January as services wages gained. Tax legislation lowered the
rate of Social Security tax and credit provisions but excluding special
factors, disposable personal income was rose 0.3% in February and 0.2%
in January. This is a pace consistent with modest growth.
In other income, proprietors’ income, rents, receipts on assets and
transfers all rose.
Savings fell from January but remains elevated after the Christmas
blow-off, so the savings rate was 5.8% after 6.1% last month. The
savings rate jumped to above 5% in late 2008 and has remained high
since. This might reflect households’ need to replenish liquid assets
after the recession destroyed wealth.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
