Feb Personal Income and Spending - Pullback from huge Jan, but underlying pretty solid, March should be huge - details here

  • February Personal Income and Outlays: -7.1% M/M vs. -7.2% consensus and +10.0% prior.
  • Consumer Spending: -1.0% M/M vs. -0.7% consensus and +2.4% prior.
  • PCE Price Index: +0.2% vs. +0.3% consensus and +0.3% prior.
  • Core PCE Price Index: +0.1% vs. +0.1% consensus and +0.3% prior.

As with the other February reports personal income and spending come in lighter than estimates but in this case less so. I'll go through each piece independently, but overall not a bad report. Table at the end.

Personal Income

Following the support payments in January, as well as the reupping of unemployment benefits which included "make up" payments, income understandably fell in Feb from those levels with transfer payments falling by 27.4%. A little disappointingly, employee compensation was flat. I think that improves in March based on the PMI reports.  We did though see proprietor's income notching its first positive month in the last four with a 2.3% gain.  Rental income and income from other assets also increased.  Overall income was up 0.2% m/m excl transfer payments. Importantly, y/y disposable personal income (personal income after taxes) is up 3.4%.  This will obviously increase dramatically again in March with the most recent stimulus bill.

Consumer Spending

After increasing strongly in January (revised to up 3.4% from 2.4%), real spending fell back a bit in February but by much less than the fall in income.  Goods were down 3% led by durables (down 4.3%) but services actually ticked up by a tenth. 

I expect a big increase in March based on the high frequency data we're seeing. 


BoA:

"Total card spending, as measured by BAC aggregated card data, increased 45% 1-yr and 23% 2-yr for the 7-days ending Mar 20.

The strong gain owes to the latest stimulus: total card spending for stimulus recipients is running 40% above the Feb avg."

JPM


Johnson Redbook comp sales report (week ended March 20): "Sales momentum progressively increased at the margin as vaccination programs continued to roll out and due to the anticipated arrival of COVID-19 stimulus payments.

For detail on personal spending, the report does a good job of breaking that down::

"The $149.0 billion decrease in current dollar PCE in February reflected a decrease of $155.9 billion in spending for goods and a $7.0 billion increase in spending for services (table 3). Within goods, the decreases were widespread across most categories, led by “other” nondurable goods (mainly pharmaceutical products and recreational items). Partly offsetting these decreases was an increase in gasoline and other energy goods. The increase in services primarily reflected increases in housing and utilities and in health care (mainly hospitals) that were partly offset by a decrease in spending for food services."


Personal Savings

Personal savings rate came in at a very healthy 13.6%

Prices

On prices goods were up 0.2%% with durables falling a tenth and non-durables up three tenths m/m. Services were up two tenths of a percent as was food.  Energy was up 3.8%.

Table of m/m income and spending:



To see more content, including my Daily Summary and summaries of some of today's economic reports go to 

https://sethiassociates.blogspot.com







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