Personal income growth moderated in January, growing by 0.3%, down from the 0.5% growth reported in December. The BEA report released this morning indicated that personal consumption grew by 0.2% in January after failing to grow the previous month.
Personal income growth continued to be led by transfer and rental income. Wage income continues to grow as well, expanding at 0.4% for the second month. Disposable income grew by just 0.1% as tax payments jumped.
Consumption resumed growth in January led by durable goods. Durable goods spending grew by 0.9%, up from 0.5 % the previous month. This contrasts with a commerce department report that indicated durable goods spending shrunk 4% in January. This indicates that although businesses cut spending on capital goods, consumers continued buying durable goods.
Consumption of non-durable goods recovered in January, growing 0.4% after falling 0.8% in December.
The savings rate dropped slightly to 4.6% from 4.7% the previous month. The savings rate for the previous month was revised up substantially due to inclusion of third quarter census data.
Prices increased by 0.2% in January, faster than the 0.1% appreciation in December. Core prices also increased by 0.2%.
Read the report.