Personal Income increased 0.5% in January, Spending increased 0.5%

The BEA released the Personal Income and Outlays report for January:

Personal income increased $79.6 billion, or 0.5 percent … in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $63.0 billion, or 0.5 percent.

Real PCE — PCE adjusted to remove price changes — increased 0.4 percent in January, compared with an increase of 0.2 percent in December. … The price index for PCE increased 0.1 percent in January, in contrast to a decrease of 0.1 percent in December. The PCE price index, excluding food and energy, increased 0.3 percent, compared with an increase of 0.1 percent.

The January PCE price index increased 1.3 percent from January a year ago. The January PCE price index, excluding food and energy, increased 1.7 percent from January a year ago.

The following graph shows real Personal Consumption Expenditures (PCE) through January 2016 (2009 dollars). Note that the y-axis doesn’t start at zero to better show the change.

Personal Consumption Expenditures Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was above consensus expectations.  And the increase in PCE was also above the consensus. A solid start for 2016.

On inflation: The PCE price index increased 1.3 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.7 percent year-over-year in January.

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