The BEA released the Personal Income and Outlays report for January:
Personal income increased $38.1 billion, or 0.3 percent … Personal consumption expenditures (PCE) increased $69.1 billion, or 0.7 percent.
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Real PCE — PCE adjusted to remove price changes – increased 0.3 percent in February, in contrast to a decrease of less than 0.1 percent in January.
The following graph shows real Personal Consumption Expenditures (PCE) through January (2005 dollars). Note that the y-axis doesn’t start at zero to better show the change.
Click on graph for larger image in graph gallery.
PCE increased 0.7% in February, but real PCE only increased 0.3% as the price index for PCE increased 0.4 percent in February.
Personal income growth was slightly below expectations. Note: Core PCE – PCE excluding food and energy – increased 0.2 percent in February.
Even though PCE growth was at expectations, real PCE was low – and this suggests analysts will downgrade their forecasts for Q1 GDP. Using the two month estimate for PCE growth (averaging the growth of January and February over the first two months of the previous quarter) suggests PCE growth of around 1.4% in Q1 (down sharply from 4.0% in Q4).
