Make Less, Spend More: Real Income Declines but Spending Jumps in March

-edited

The BEA finally caught up with the government shutdown. It released February and March spending and income data today.

Disposable personal income is flat and real disposable income is negative but consumers are spending more anyway.

That is the message from the BEA's Personal Income and Outlays reports for February and March, both released today.

March

  • Personal income increased $11.4 billion (0.1 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $0.6 billion, (less than 0.1 percent) and personal consumption expenditures (PCE) increased $123.5 billion (0.9 percent).
  • Real DPI decreased 0.2 percent in March, and real PCE increased 0.7 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased less than 0.1 percent.
  • In March, real PCE increased $87.4 billion, which reflected a $66.3 billion increase in spending on goods and an increase of $27.9 billion in spending on services. Within goods, increases were widespread, with spending on motor vehicles and parts the leading contributor. Within services, the largest contributor to the increase was spending on health care.

February

  • Personal income increased $35.6 billion (0.2 percent) in February. Disposable personal income increased $23.0 billion (0.1 percent), and personal consumption expenditures increased $11.7 billion (0.1 percent).
  • Real DPI increased less than 0.1 percent in February, and real PCE decreased less than 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
  • The increase in personal income in February primarily reflected increases in compensation of employees, government social benefits to persons, and personal dividend income that were partially offset by a decrease in personal interest income.
  • In February, real PCE decreased $2.8 billion, which reflected a $23.4 billion decrease in spending on goods. This was partially offset by an increase of $16.4 billion in spending on services (table 7). Within goods, food and beverages purchased for off-premises consumption was the leading contributor to the decrease. Within services, the largest contributor to the increase was spending on household electricity and gas.

Synopsis

Make less, spend more.

This data, released today, was supposedly already factored into the GDP report for the first quarter.

These reports strongly suggest the government slowdown had a far bigger impact than expected.

Mike "Mish" Shedlock

Comments
No. 1-8
2banana
2banana

Usually happens when there is good public confidence in the economy.

++++

Make less, spend more.

Bam_Man
Bam_Man

Since the world is going to end in less than 12 years, we might as well spend it all now.

jivefive99
jivefive99

I still think consumers are just catching up with the credit that was restored after it was lost (via bankruptcies) and clawed back right after 2008 (two of my credit cards had my available credit involuntarily reduced right after the 2008 crisis). Once consumers spend all the newly available credit, the Great Nowhere will begin.

AWC
AWC

Not to worry. The Fed has an election to print!

Mish
Mish

Editor

"Since the world is going to end in less than 12 years, we might as well spend it all now."

I proposed that as well. Borrow as much as you can. Have a party. The world won't be here in 12 years.