Well, at least the income number is increasing. And call me crazy, but I like that fact that incomes are increasing a little bit more than spending. And who knows if the jobless numbers are actually accurate, but at least they aren’t getting worse and they are trending in a good direction.
PCE Deflator (YoY)
PCE Core (MoM)
PCE Core (YoY)
Initial Jobless Claims
Continuing Jobless Claims
Wire: BLOOMBERG News (BN) Date: Mar 1 2012 7:47:06
U.S. January Consumer Spending Rises 0.2%, Incomes Up 0.3% (2)
(Updates with economist’s comment in fourth paragraph.)
By Timothy R. Homan
March 1 (Bloomberg) -- Consumer spending in the U.S. rose
less than forecast in January after little change the previous
month, showing a lack of improvement in the biggest part of the
Purchases climbed 0.2 percent, while incomes increased 0.3
percent, Commerce Department figures showed today in Washington.
The median estimate of economists surveyed by Bloomberg News
called for a 0.4 percent increase in spending and a 0.5 percent
rise in incomes. Warmer weather may have restrained spending on
services such as utilities.
Households, whose spending accounts for about 70 percent of
the world’s largest economy, may be reluctant to increase
purchases as gas prices continue to climb and home prices keep
falling. Bigger gains in employment and wages may be needed to
give consumers the confidence to boost spending.
“We’ve seen some pressures on the household sector in terms
of gasoline prices,” said Scott Brown, chief economist at
Raymond James & Associates Inc. in St. Petersburg, Florida. “It
doesn’t look like things are falling apart, but things aren’t
Projections for spending in the Bloomberg survey of 81
economists ranged from gains of 0.2 percent to 0.6 percent.
Fewer Americans unexpectedly filed first-time claims for
unemployment insurance payments last week. Applications for
jobless benefits decreased 2,000 in the week ended Feb. 25 to
351,000, matching a four-year low, the Labor Department said
Stock-index futures held gains after the figures. The
contract on the Standard & Poor’s 500 Index expiring this month
climbed 0.3 percent to 1,367.8 at 8:46 a.m. in New York.
Incomes climbed less in January than the previous month,
when they rose 0.5 percent. Wages and salaries increased 0.4
percent in January for a second month.
Income after taxes and adjusted for inflation declined 0.1
percent in January after a 0.3 percent rise. It was the second
decrease in the last three months. The drop in income helped push
the savings rate down to 4.6 percent in January from 4.7 percent.
Adjusted for inflation, which are the figures used to
calculate gross domestic product, consumer spending was little
changed for a third month, today’s report showed.
Spending on services adjusted for changes in prices fell 0.1
percent in January after no change the previous two months.
Purchases of durable goods climbed 0.9 percent after a 0.7
Income gains in the second half of 2011 were stronger than
previously reported, the Commerce Department’s GDP showed
yesterday. After-tax incomes adjusted for inflation increased at
a 1.4 percent annual rate in the final three months of 2011, more
than the previously reported 0.8 percent gain.
In the prior three months, incomes climbed 0.7 percent
compared with a 1.9 percent slump that was initially reported.
Wages and salaries from July through September rose $107.2
billion, up from the $24.8 billion gain initially reported. The
economy expanded at a 3 percent annual pace in the final three
months of 2011, compared with a 2.8 percent estimate. Household
purchases rose at a 2.1 percent rate.
Today’s figures contrast with other gauges of spending.
Retail sales in January advanced 0.4 percent after little change
the prior month, according to Commerce Department figures last
month. Merchants including Macy’s Inc., Gap Inc. and Target Corp.
cut prices to attract more business during the holiday shopping
At the same time, consumers are becoming more optimistic.
The Conference Board’s gauge in February increased to the highest
level in a year. The Thomson Reuters/University of Michigan
measure of consumer sentiment increased to 75.3 in February, the
sixth straight monthly gain and the longest advance since 1997.
A firming labor market is lifting Americans’ spirits. The
jobless rate dropped to 8.3 percent in January, and employers
added 243,000 new workers, data from the Labor Department showed
Still, that improvement is not fast enough for some
companies like Cracker Barrel Old Country Store Inc.
“While recent employment data are moving in a favorable
direction, the pace of improvement remains slow, and consumer
spending is still being pressured by higher grocery and energy
costs,” Sandra Cochran, chief executive officer of the Lebanon,
Tennessee-based firm, said on a Feb. 21 conference call. “In
response, many in the industry are focused on promotional
Federal Reserve Chairman Ben S. Bernanke yesterday said that
while there have been “positive developments” in the labor
market, Bernanke said it “remains far from normal.”
“At present, with the unemployment rate elevated and the
inflation outlook subdued, the committee judges that sustaining a
highly accommodative stance for monetary policy is consistent
with promoting both objectives” for stable prices and maximum
employment, Bernanke said in testimony to the House Financial
Services Committee in Washington.
He also said that a recent rise in gasoline prices “is
likely to push up inflation temporarily” and reduce consumer
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury