Courtesy of Mish.
The Bureau of Economic Analysis report on Personal Income and Outlays for January shows a 4% decline in real disposable income (the biggest decline in 20 years) following sharp gains in December. Personal Consumption Expenditures (PCE) eked out a .1% month-over-month gain.
Personal Income and Outlays, January 2013
Personal income decreased $505.5 billion, or 3.6 percent, and disposable personal income (DPI) decreased $491.4 billion, or 4.0 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $18.2 billion, or 0.2 percent. In December, personal income increased $353.4 billion, or 2.6 percent, DPI increased $325.7 billion, or 2.7 percent, and PCE increased $14.8 billion, or 0.1 percent, based on revised estimates.
Real disposable income decreased 4.0 percent in January, in contrast to an increase of 2.7 percent in December. Real PCE increased 0.1 percent, the same increase as in December.
Wages and Salaries
Private wage and salary disbursements decreased $44.8 billion in January, in contrast to an increase of $49.1 billion in December. Services-producing industries’ payrolls decreased $41.5 billion, in contrast to an increase of $39.3 billion.
Personal Outlays and Personal Saving
Personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $22.0 billion in January, compared with an increase of $13.3 billion in December. PCE increased $18.2 billion, compared with an increase of $14.8 billion.
Personal saving — DPI less personal outlays — was $283.9 billion in January, compared with $797.4 billion in December. The personal saving rate — personal saving as a percentage of disposable personal income — was 2.4 percent in January, compared with 6.4 percent in December.
December to January Wild Swing Expected
The December to January swings were generally expected (at least they should have been). Corporations brought as many wages and bonuses forward as they could to avoid 2013 payroll tax hikes.
The surge in the December savings rate and the surge in December personal incomes were essentially a mirage.
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