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Apr-29-2011US Incomes And Spending Kept Rising In March(topic overview)
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After-tax incomes, adjusted for inflation, actually fell 0.1 percent. Economists had expected stronger gains in consumer spending this year, helped by stronger employment growth and the tax cut. Economists have scaled back their growth forecasts because of the rise oil prices. [1] The government said on Thursday that consumer spending growth slowed to a 2.7 percent annual rate in the first quarter after a 4 percent rise in the final three months of 2010. That gain, which took into account the spending data released on Friday, was a factor behind a slowing in overall economic growth to a 1.8 percent pace at the start of this year from the 3.1 percent expansion in the last quarter of 2010. [2] The latest quarterly Associated Press economic survey found economists forecasting that the first three months of the year will represent the slowest period of the year. They expect the economy will grow at a 3 percent rate for the rest of the year. These analysts are forecasting that consumer spending will grow 2.8 percent this year. While that is weaker than they had expected three months ago, it would be about twice the growth in spending last year. [1]
The consensus view of economists surveyed by FactSet is that consumer spending rose 0.5 percent in March while personal incomes increased 0.4 percent. [1] WASHINGTON, April 29 (Xinhua) -- U.S. consumer spending and personal income both increased in March, a sign of continuing economic recovery, reported the Commerce Department on Friday. [3] U.S. consumer spending increased by 0.6% in March from February, rising for the ninth straight month, the Department of Commerce said. This compares with an upwardly revised 0.9% advance in February. It was helped by an increase in personal incomes. [4] The U.S. Commerce Department revealed that personal income increased by $67 billion, or 0.5 percent, in March. This followed an upwardly revised 0.4 percent increase in February. This figure was revised higher from initial estimates of 0.3 percent. [5]
The Commerce Department'''s Bureau of Economic Analysis says personal incomes rose 0.5 percent in March. [6]
Personal spending rose in March, according to a Commerce Department report released in Washington Friday, but it wasn'''t like consumers had much choice. [6] Consumer spending rose 0.6 percent for a ninth straight month of gains, after advancing 0.9 percent in February, the Commerce Department said. [2] The Commerce Department said consumer spending increased 0.6 percent, rising for a ninth straight month, after an upwardly revised 0.9 percent advance in February. [7]
Purchases rose 0.6 percent after a revised 0.9 percent gain the prior month that was higher than previously estimated, Commerce Department figures showed today in Washington. [8]
The economy began 2011 on a weaker note, expanding at a 1.8 percent annual rate in the first quarter after a 3.1 percent gain in the final three months of 2010, Commerce Department figures showed yesterday. [8] A separate report from the Labor Department showed wages grew at a tepid 0.4 percent rate in the first quarter, and were up only 1.6 percent from a year ago. [2]
WASHINGTON (Dow Jones)--Americans' incomes grew at a solid pace last month and a gauge of consumer sentiment rose in April, boding well for spending amid continued pressure from high gasoline and food prices. U.S. labor costs, meanwhile, posted their sharpest gain in a year in the first quarter, another sign that Americans with a job are poised to spend more. [9] WASHINGTON (Reuters) - U.S. consumer spending rose in March as households stretched to cover higher costs for food and gasoline, with inflation posting its biggest year-on-year rise in 10 months. Despite the rising cost of living, consumers grew a bit optimistic about the economy this month and even dialed down their expectations for inflation over the next five to 10 years, another report showed on Friday. [2] NEW YORK (Reuters) - Rising gasoline and food prices lifted U.S. consumer spending in March and the increase in overall inflation from a year-ago was the largest in 10 months, government data showed on Friday. [7]
U.S. consumer spending increased in March as more of household budgets were spent on fuel and food as the increase in overall inflation from this point last year was the largest in 10 months. [10]
The March PCE data, on a volumes basis, provides the monthly detail of the 2.7% annualized gain in first-quarter 2011 consumer spending that was contained in Thursday's GDP report for the quarter. This monthly detail reveals fairly solid increases during the quarter with an average monthly increase of 0.3%. The maintenance of this monthly pace over the April to June period would be consistent with our current forecast of consumer spending growth of 3.7% in the second quarter of 2011. This strengthening on a quarterly basis is premised on employment continuing to grow and for the payroll tax cuts, introduced at the start of the year, to have an increasingly supportive effect on spending. [11] Strengthening consumer spending would augur well for overall GDP growth to rebound as well to an above-potential rate after the modest 1.8% increase in the first quarter of 2011. The maintenance of this stronger pace of activity offers the prospect of continued downward pressure on the unemployment rate. [11] The government reported on Thursday that consumer spending grew at a 2.7 percent annualized rate in the first quarter after a 4 percent increase in the final three months of 2010. [12]
The 0.6 percent increase in consumer spending was led by higher prices we'''re paying for gas and groceries. [6]
While there was a solid-sounding 0.6 percent gain in personal spending in March from February, the Bureau of Economic Analysis says most of that increase was not "real." That's because higher prices, especially on gasoline and food, were behind most of the rise. [13] The core price index for personal spending, excluding volatile sectors like food and energy, increased by only 0.1 percent. [5] The report showed underlying inflation, watched closely by the Fed, held steady in March. The core PCE price index, which excludes food and energy prices because of their volatility, increased 0.9% on a year-over-year basis the second month in a row. [14] High food and energy prices kept inflation elevated last month, with the personal consumption expenditures price (PCE) index up 0.4 percent after rising by the same margin in February. [12]
Consumer prices rose 0.4 percent in March for a second straight month, according to an inflation gauge in the spending report. [2] Prices rose a stiff 0.4 percent leaving the spending that drives 70 percent of the economy up just 0.2 percent after adjusting for inflation. [2]
After adjusting for higher inflation, much of it caused by the spike in gasoline prices, spending rose a smaller 0.3 percent. [1]
Today'''s report showed that spending adjusted for inflation, which are the figures used to calculate gross domestic product, rose 0.2 percent after a 0.5 percent gain in February. [8]
The Fed'''s preferred price measure, the so-called core inflation reading that excludes food and fuel, rose 0.9 percent in March from a year earlier, matching the 12-month gain in February. [8] "The inflation burden increased in the quarter, things were progressively worse as you moved from January to March." "Income data also rose a bit more than expected, but it's not growth in wage and salary income that is driving the headline numbers, it's other income, things like dividends and capital gains, which were decent in March. [7] Using chained 2005 dollars, disposable income rose by just 0.1% in March, after flat growth in February. You can see that the gap between these lines began to grow late last year, when inflation began to pick up. This translates into meaning that Americans gained little purchasing power last month. [15]
While the lower growth figure marks a setback for the recovery, Federal Reserve Chairman Ben Bernanke has said the slowdown would likely be temporary. one reason for the deceleration was restrained spending amid higher prices, though economic growth during January through March was also held back by temporary factors, including an unusually severe winter and a sharp drop in defense spending. The Fed this week trimmed its outlook for economic growth in 2011 while raising projections on inflation. Higher oil prices have helped the bottom lines of big producers such as ConocoPhillips, which saw first-quarter earnings rise 44%. [14] Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent in March after a previously reported 0.7 percent rise. [7] The rise in spending, though less than the 0.9 percent increase in February, was still greater than the 0.5 percent increase most economists had predicted. [5]
The increase in income seems also to have translated to an increase in spending, with personal consumer expenditures increasing by $60.7 billion, a 0.6 percent increase. [16] We're seeing a further improvement in personal spending and personal income. That's the type of news that going forward could keep consumer spending well supported and ultimately keep the overall economy on track for a modest rebound. I don't think it's going to have a big impact on the dollar because it doesn't really change the outlook for interest rates, which is the key driver for it." [7] We're still seeing significant transfer payments from the government, there is significant government assistance in the income numbers." "March personal income and spending gains of 0.5% and 0.6% respectively both outpaced their respective consensus estimates by 0.1%, but there was not much fresh information in the data, with Q1 totals already visible in the GDP report. Personal spending saw both January and February gains revised up by 0.2%, to 0.5% and 0.9% respectively, but revisions to income were minor (January down 0.1% to 1.1%, February up 0.1% to 0.4%). [7] After yesterday's GDP report, today's personal income and expenditure data offered up details on the evolution of spending over the first three months of the year. The story this morning was in the positive revisions and the acceleration in services spending. Services spending, which accounts for 65% of the total, in March grew at its fastest pace since May 2010 and is now up 2.0% on a year-over-year basis. [17]
Economists surveyed by Dow Jones Newswires had estimated spending would climb by 0.5% and incomes by 0.3% in March. The data Friday followed a government report this week that the economy slowed in the first three months of 2011. [14]
WASHINGTONAmericans' incomes grew in March, but spending slowed as rising prices for food and energy restrained the economy. [14]
Analysts believe the rising cost of food and higher energy prices are affecting the consumer spending data. [4] Consumer spending in the U.S. climbed in March as Americans spent more on food and fuel. [8] Consumer spending accounts for 70 percent of the total U.S. economic activity, and experts expect the rebound of consumption will strengthen the economic recovery in 2011. [3] Consumer spending is a crucial part of the U.S. economy and accounts for about 70% of economic activity. [4]
Consumer spending is important because it accounts for about 70 percent of economic activity. [1] Consumer spending rose 0.6 per cent last month, according to the Bureau of Economic Analysis, which beat analyst expectations of 0.5 per cent. [10]
Consumer spending increased by 0.6% after rising an upwardly revised 0.9% in February. [14] '''Anything that increases consumer income will increase consumer spending, be that more jobs or higher wages. [8]
The savings rate among U.S residents remained largely unchanged from February to March, with the personal savings rate, as measured by disposable income less spending, remaining at 5.5 percent. [5] Last month, the U.S. savings rate, personal saving as a percentage of disposable personal income, kept unchanged at 5.5 percent. It is well above the 2.1 percent average savings rate for all of 2007. [3]
Disposable personal income increased 67.0 billion U.S. dollars, or 0.5 percent in March, said the department. [3] Most economists had forecast a slightly slower increase in March personal income of 0.3 percent. [5] In February, spending jumped 0.7 percent and personal incomes increased 0.3 percent. [1] A 0.2% rise in real personal spending is the 11th straight monthly gain while a 0.1% rise in real personal income follows a flat February which was revised up from a 0.1% decline, and a 0.5% January gain that would have been negative were it not for the introduction of a payroll tax holiday. [7]
The recent volatility in service spending looks similar to the picture from utilities output, which is sensitive to weather. "There were no surprises from the price data, with a 2nd straight 0.4% rise in the overall PCE price index and a 0.1% gain in the core, the latter a slowing from 2 straight 0.2% gains with the march rise before rounding being 0.1308%. [7] The other two components were less affected by prices with volumes increases in services of 0.4% and durables of 0.1%. The effect of higher gasoline prices was evident in the overall PCE price index rising 0.4% in the month; however, there was little evidence of this pressure spilling over into the core, or ex-food and energy component, which was up only 0.1% in the month. This resulted in the core year-over-year rate remaining low at 0.9% and thus unchanged from February. [11] The core PCE index -- excluding food and energy - slowed to a 0.1 percent increase after rising 0.2 percent in February. [2]
The increase in gas prices was the main factor behind the increase in the headline PCE deflator (energy is up 15.3% year-over-year), but so far, core PCE - the Fed's chosen measure of underlying price pressures - remains relatively subdued at just 0.9%. The Fed will be watching this indicator as well as measures of inflation expectations very closely as it enters into the twilight of monetary easing. [17] Inflation as measured by the year-over-year change in the personal consumption deflator rose to 1.8% (below consensus of 1.9%) from 1.6% in February, while core PCE inflation (ex food & energy) remained steady at 0.9%. [17] Disposable incomes, or the money left over after taxes, rose 0.1 percent after adjusting for inflation, following no change in February, a reminder of the challenge represented by rising food and energy costs. [8] Even with job gains and rising incomes, further increases in food and energy costs pose a risk to growth. [8]
"The personal income breakdown saw wages and salaries growth slow to 0.3% after 2 straight 0.4% gains, a reflection of weakness in wage growth. [7] The government accounted for more than one-third of the growth in personal income last month. That's the biggest boost transfer payments have provided since August. [15]
The upside surprise in personal income came from an above trend rise in government transfers, something which is unlikely to be repeated in the future trend. [7]
The headlines will tell you: personal income increased 0.5% last month. That's what the Bureau of Economic Analysis reports. [15] Personal income rose 0.5% in March, slightly above market expectations for 0.4%. [17] Personal consumer expenditure (PCE) in March rose 0.6%, which was slightly stronger than the 0.5% gain expected. [11] Consumer purchases rose at a 2.7 percent pace, more than forecast, following a 4 percent gain the previous quarter. Americans may find it difficult to boost their spending as they pay more for groceries and gas. [8] Estimates from 69 economists surveyed by Bloomberg ranged from spending gains of 0.2 percent to 1 percent after a previously reported 0.7 percent gain the prior month. [8] The moderation in spending was not as sharp as economists had feared, suggesting that consumers were somewhat adapting to the high commodity prices, but could face a litmus test should gasoline prices shoot above $4 a gallon. [12] With gasoline topping $4 a gallon in parts of the U.S. and prices for meat and grains rising, consumers are under pressure to cut spending for other things. [14]
The moderation in spending was not as sharp as economists had feared, showing consumers remained surprisingly resilient in the face of higher prices for food and fuel. [2] The increase in spending seems driven less by demand for goods than by high energy and food prices. [5] '''The higher food and energy prices function like a tax in the short term, and discretionary spending is going to bear the brunt of that,''' said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. [8]
"What we are seeing is that the nominal spending is rising, but the concern is that a large share of income is going to meet higher prices. "I think this trend will continue, and we have not seen the peak in gasoline. This sets the stage for weaker consumption in the second quarter". [4] "Real incomes, when adjusted for inflation, are shrinking over time. What we are seeing in this monthly data is similar to what the quarterly GDP data yesterday, the story in the first quarter was higher gas prices are forcing people to spend more at the expense of other items." [7] "The story in the first quarter was higher gas prices are forcing people to spend more at the expense of other items," said Christopher Low, chief economist at FTN Financial in New York. [2]
The increase compared with the 0.5 percent median estimate of economists surveyed by Bloomberg News. [8] Economists forecast incomes would rise 0.4 percent, according to the Bloomberg survey. [8] Incomes increased 0.5 percent last month after a 0.4 percent gain in February, but wages an salaries only advanced 0.3 percent. [2] Wages and salaries increased 0.3 percent in March after gaining 0.4 percent a month earlier. [8]
The gauge tied to spending patterns increased 1.8 percent from March 2010, following a 1.6 percent gain in the 12 months ended in February. [8] The overall increase in March PCE was led by a 0.9% rise in spending on non-durables with spending on services up 0.5%. The durables component rose a minimal 0.1% in the month although this followed a 2.1% surge in February. [11] Spending rose by 0.6% last month, a little less of an increase than the 0.9% jump in February. Since September you can kind of see these lines move up together in a somewhat linear fashion. [15]
Incomes rose by 0.5%, following an upwardly revised 0.4% increase in February, the Commerce Department said Friday. [14] The Commerce Department revised February'''s reading to 0.4 percent from a previously reported 0.3 percent. [8]
Food costs rose 0.8 percent last month, the most since July 2008, consumer-price index data from the Labor Department showed on April 15. [8] Friday's data showed the price index for personal-consumption expenditures increased 1.8% on a year-over-year basis after rising 1.6% in February. [14]
The core index, which is closely watched by Federal Reserve officials, increased 0.9 percent in the 12 months through March. [12] Compared to March last year, the index was up 1.8 percent - the largest increase since May - after rising 1.6 percent in February. [12]
Personal consumption expenditures gained 60.7 billion U.S. dollars, or 0.6 percent in March, lower than the 0.9 percent increase in February. [3] The personal savings rate was 5.5 percent in March, unchanged from February. [6] With the increase in income close to the gain in PCE, the savings rate managed to hold steady at 5.5%. [11]
We can be encouraged that real disposable income has been able to avoid declines despite the surges in gasoline prices, though with wages soft and gasoline prices remaining firm gains in Q2 will require continued labor market recovery. [7] Gasoline prices nationally are now around $3.89 a gallon, up 30 cents in just a month. The AP survey found that economists believe those prices will drop to around $3.50 by fall. The Social Security tax will give most households an additional $1,000 to $2,000 this year. [1] Consumers could be put to the test, however, if gasoline prices shoot above $4 a gallon. [2]
The national price for regular unleaded gasoline rose 3.5 cents to $3.88 in the week through Monday. [2]
Federal Reserve Chairman Ben Bernanke on Wednesday expressed confidence high energy prices would not spark broader inflation, saying gasoline costs should stabilize. [2]
The survey's one-year inflation expectation was unchanged at 4.6 percent, but the five-to-10-year inflation outlook slipped to 2.9 percent from 3.2 percent in March. A third report showed factory activity in the country's Midwest slowed this month, potentially indicating some cooling in manufacturing. [2] When adjusted for inflation, spending edged up 0.2 percent last month after rising 0.5 percent in February. [7] When adjusted for inflation, spending went up 0.2%, less than February's 0.5% gain. [14]
While overall spending growth decelerated in March, the pullback was entirely in goods consumption, which, after upward revisions, was very strong in February. [17] The 1.8 percent annual growth rate for the January-March quarter was weaker than the 3.1 percent growth in the final three months of 2010. [1] Same-store sales at Victoria'''s Secret rose 19 percent, more than 10 times the rate predicted by estimates compiled by Retail Metrics Inc. Industrywide, retailers posted a jump of 2.2 percent, compared with the average projection for a 0.5 percent drop. [8] Incomes climbed 0.5 percent, more than projected. Federal Reserve Chairman Ben S. Bernanke signaled this week that the central bank would maintain record monetary stimulus after ending large-scale bond purchases in June, as part of an effort to bolster the expansion. [8] April 27 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke speaks about the outlook for Fed monetary policy, the impact of ending the central bank's $600 billion bond-buying program on financial markets and the U.S. economy. Bernanke's remarks were made at his first news conference following a meeting of the Federal Open Market Committee. (Excerpts. [8] The government reported Thursday that the overall economy slowed sharply in the first three months of the year. [1]
U.S. GDP figures for the first three months of the year are expected to show growth has slowed down. [4]
Is the news really as good as it looks? Digging deeper shows that the income growth wasn't so spectacular. [15]
Income increased at an annualized rate of $67 billion. Of that, $25 billion consisted of government handouts, in the form transfer payments such as Social Security and unemployment benefits. [15] To make matters even worse, if you take inflation into account, disposable income barely increased at all. [15] "The inflation burden increased in the quarter, things were progressively worse as you moved from January to March." [2]
The Thomson Reuters/University of Michigan consumer-sentiment index increased to 69.8 at the end of April from a preliminary April reading of 69.6 and 67.5 at the end of March. [14] The Thomson Reuters/University of Michigan's consumer sentiment index rose to 69.8 from 67.5 in March. [2]
The contract on the Standard & Poor'''s 500 Index expiring in June climbed 0.2 percent to 1,357.4 at 8:34 a.m. in New York. [8]
Over the past year, price have risen 1.8 percent -- the largest increase since May and an acceleration from the 1.6 percent logged in the 12 months through February. [2] Core prices have risen just 0.9 percent over the past 12 months, just a touch above the all-time low of 0.7 percent struck in December. [2] The advance was revised up to 0.9 percent from the 0.7 percent that was originally reported last month. [5]
Friday's report also showed that February spending had been even higher than initially reported. [5] In real terms spending was up 0.2%, decelerating from an upwardly revised 0.5% in February. [17] Spending in nominal terms was led by non-durables but in real terms by services which rebounded from a weak start to the quarter. [7]
Spending on non-durable goods in particular were revised up considerably over the first two months - from below 0.2% to 0.5%. [17]
Gross domestic product rose 1.8% in the first quarter, down from a gain of 3.1% at the end of 2010. [14] The momentum going into Q2 is moderately positive in real terms, even with prices up sharply on energy, though continued job gains will be essential to sustain the recovery's momentum. [7] WASHINGTON -- Americans likely saw their take-home pay rise in March, helped by a Social Security tax cut. About half of the tax break is being eaten up by the higher prices they are paying to fill up their cars, leaving less money to spend on other items. [1]
Separately, consumer sentiment rebounded slightly at the end of April, according to a report released Friday, while inflation expectations remained steady. [14]
SOURCES
1. Ahead of the Bell: Consumer spending - Forbes.com
2. Consumer spending rises on higher prices | Reuters
3. U.S. consumer spending, personal income rise in March
4. BBC News - US consumer spending boosted by rise in personal income
5. Personal Income And Spending Rise In March
6. Personal spending , incomes rise | Washington Business Journal
7. Instant View: Consumer spending, income rise in March | Reuters
8. Personal Spending in U.S. Increases 0.6%; Incomes Up 0.5% - Bloomberg
9. UPDATE: US Incomes And Spending Kept Rising In March - WSJ.com
10. FT.com / US / Economy & Fed - Fuel and food push up US consumer spending
11. U.S. Consumer Spending Continued to Grow in March - Forex Analysis, Currency Forecast, FX Trading Signal - Action Forex
12. Consumer spending and income rise in March - International Business Times
13. Consumer Spending Growth Slowed In March : The Two-Way : NPR
14. U.S. Incomes Rise, Spending Slows - WSJ.com
15. Did Americans' Income Really Rise in March? - Daniel Indiviglio - Business - The Atlantic
16. U.S. Personal Income Up 0.5% In March, Beating Expectations
17. U.S. Consumer Spending - Not Such a Bad Start to the Year after All - Forex Analysis, Currency Forecast, FX Trading Signal - Action Forex
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