While the key number analysts were looking for in today's Personal Spending data was the PCE Price Index, both headline and core, which rose by 1.9% and 1.7% respectively, the latter coming in as expected, just shy of the Fed's 2.0% inflation target, the internals on US incomes and spending were just as notable. Here, the silver lining of a rise in incomes (+0.4% MoM vs +0.3% exp) was dashed by a disappointingly slow growth in spending (+0.2% vs +0.5% prev).
With incomes rising more than spending, the savings rate predictably ticked up from multi year lows, rising from 5.4% to 5.5% in January.
On the income side, the increase in personal income was almost entirely from service-producing industries wages, which increased by $22.5BN, while Goods-producing was higher by just $4 billion. Additionally, Social Security transfer benefits added another $9 billion.
However, for the 'average joe', facing a rising cost of goods, real personal spending plunged 0.3% in January: the biggest drop since September 2009.
Finally, as a result of surging inflation, and disposable incomes suddenly unable to keep up, the real annual growth in disposable income per capita fell to just 1.5%, the weakest in over 3 years and a red flag for those calling for another renaissance for US consumers.