Personal Income Up 0.3%, Consumption Up 0.7%

In February, personal income rose by 0.3% following a payroll tax reduction induced jump of 1.3% in January. Wages and salaries also grew by 0.3% over the month, the third straight gain of that size. From a year prior, personal income was 5.1% higher.

Personal consumption rose by a larger 0.7% over the month. The gain was driven by a large jump up in durable goods spending. Services spending growth continued a recent trend of lagging goods consumption growth. From a year prior, consumption spending was 4.1% higher.

The higher growth rate of consumption relative to income over the month caused the savings rate fall back slightly to 5.8% from 6.1% in January. Savings have been modestly higher in the past few months relative to the second half of last year.

As measured by the PCE deflator, prices increased 0.4% over the month, primarily due to energy prices. The PCE has risen considerably in the past three months. Still from a year prior, the PCE deflator was only 1.6% higher. However, this was up from 1.0% as recently as November. The core PCE deflator, which excludes energy and food prices, rose by a lesser 0.2% over the month and was 0.9% higher than a year prior.

m/m % change	Feb	Jan	Dec	Nov	Oct	Sep
Personal Consumption	0.7	0.3	0.4	0.3	0.7	0.3
Real	0.3	0.0	0.1	0.2	0.5	0.2
Personal Income	0.3	1.2	0.5	0.3	0.5	0.0
Real	-0.1	0.9	0.2	0.2	0.3	-0.1
PCE Deflator	0.4	0.3	0.3	0.1	0.2	0.1
Core PCE Deflator	0.2	0.2	0.0	0.1	0.0	0.0
Savings Rate (level)	5.8	6.1	5.6	5.5	5.5	5.8