Personal Income, Spending Come In Weaker Ahead Of Gasoline Price Shock

Tyler Durden's picture

And some more bad news for the economy, as the driver of 70% of US GDP, the US consumer, continues to retrench. Today's personal spending and income data showed several things: that in January Personal Incomes did not keep pace with the rate of growth, rising 0.3% compared to 0.5% in December, and less than the 0.5% expected. Spending also missed expectations of a 0.4% rise, instead picking up just 0.2%, from 0.0% in December. More importantly, we once again see that living in a socialist state has its drawbacks when the spigot is shut off: among the biggest drivers for the weak data was a change in government handouts: "Personal current transfer receipts decreased $3.6 billion in January, in contrast to an increase of $13.8 billion in December.  Within personal current transfer receipts, “other” government social benefits to persons decreased $14.9 billion in January, in contrast to an increase of $1.5 billion in December.  The January change in “other” government social benefits to persons reflected a decrease of $13.6 billion due to the expiration of the Making Work Pay refundable tax credits." Luckily what the government takes with one hand it offsets with the other: "Government social benefits for Medicaid decreased $7.8 billion in January, in contrast to an increase of $0.2 billion in December.  Government social benefits for social security increased $20.3 billion in January, compared to an increase of $9.6 billion in December. The January change reflected 3.6-percent cost-of-living adjustments (COLAs) to social security benefits and to several other federal transfer payment programs.  Together, these COLAs added $30.2 billion to the January increase in government social benefits to persons."  Well at least somebody still does COLA in this day and age of ubiquitous 'deflation.'

Somre more commentary from Bloomberg, which is getting increasingly dour on the US consumer:

  • Personal spending up 0.2% vs est. 0.4% (range 0.2%-0.6%)
  • Core inflation probably rose 0.2% M/m, matching est.; rose 1.9% Y/y vs est. 1.8%
  • "Troubling’’ that spending data calculated prior to gasoline price spike, “doesn’t bode well” for current qtr growth, says Bloomberg economist Joseph Brusuelas
  • Real disposable personal incomes down 0.1%, up “lowly” 0.6% Y/y, implying “extremely weak spending in the near term,” says Bloomberg economist Rich Yamarone

As for our favorite savings rate chart, alas since all the data has been revised, we will need to adjusted our methodology to match all the behind the scenes fudging that continues to go on at all the BLS linked departments.