Consumer Health: Here’s a Treasure Trove of New Data

Personal income increased $38.1 billion, or 0.3 percent, and disposable personal income increased $36.0 billion, or 0.3 percent, in February, according to the Bureau of Economic Analysis. These numbers were in line with analyst expectations.

Personal consumption expenditures increased $69.1 billion, or 0.7 percent — beating Wall Street’s expecations for a 0.5 percent rise.

In January, personal income increased $147.4 billion, or 1.2 percent, DPI increased $92.0 billion, or 0.8 percent, and PCE increased $29.5 billion, or 0.3 percent, based on revised estimates.

Real disposable income decreased 0.1 percent in February, in contrast to an increase of 0.5 percent in January. Real PCE increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.

Personal Consumption Expenditure Index 1

The January change in disposable personal income was affected by two large special
factors:

1) Reduced employee contributions for government social insurance, which reflected
provisions of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act
of 2010, boosted DPI in January by reducing the employee social security contribution rates
(employee contributions for government social insurance are a subtraction in the calculation
of personal income).

2) This effect was partly offset by the expiration of the Making Work Pay provisions of the American Recovery and Reinvestment Act of 2009, which boosted personal current taxes and reduced DPI (personal current taxes are a subtraction in the calculation of DPI).

Excluding these two special factors, which are discussed more fully below, DPI increased $36.0 billion, or 0.3 percent, in February, following an increase of $25.2 billion, or 0.2 percent, in January.

Wages and salaries

Private wage and salary disbursements increased $16.4 billion in February, compared with an increase of $16.7 billion in January. Goods-producing industries’ payrolls decreased $1.0 billion, in contrast to an increase of $12.0 billion; manufacturing payrolls decreased $1.6 billion, in contrast to an increase of $8.3 billion. Services-producing industries’ payrolls increased $17.4 billion, compared with an increase of $4.7 billion. Government wage and salary disbursements increased $0.3 billion, compared with an increase of $2.5 billion.

Other personal income

Employer contributions for employee pension and insurance funds increased $2.7 billion in February, compared with an increase of $3.5 billion in January.

Employer contributions for government social insurance increased $1.0 billion in February, compared with an increase of $8.9 billion in January. The January change reflected an increase in the tax rates paid by employers to state unemployment insurance funds, which had boosted January contributions by $7.5 billion. (Changes in employer contributions for government social insurance do not affect personal income, because employer contributions for government social insurance are also included in total contributions for government social insurance, which is a subtraction in the calculation of personal income.)

Proprietors’ income increased $2.9 billion in February, compared with an increase of $4.2 billion in January. Farm proprietors’ income increased $0.5 billion, the same increase as in January. Nonfarm proprietors’ income increased $2.5 billion in February, compared with an increase of $3.7 billion in January.

Rental income of persons increased $8.3 billion in February, compared with an increase of $8.2 billion in January. Personal income receipts on assets (personal interest income plus personal dividend income) increased $7.7 billion, compared with an increase of $8.8 billion. Personal current transfer receipts increased $1.1 billion, in contrast to a decrease of $0.1 billion.

Contributions for government social insurance — a subtraction in calculating personal income — increased $2.2 billion in February, in contrast to a decrease of $94.6 billion in January. The January change reflected decreases in personal contributions for government social insurance and increases in employer contributions. The January change in personal contributions for government social insurance reflected the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which temporarily decreased the social security contribution rate for employees and self-employed workers by 2.0 percentage points for 2011, or $105.4 billion in January. As noted above, employer contributions were boosted $7.5 billion in January by increases in the unemployment insurance rate.

Personal current taxes and disposable personal income

Personal current taxes increased $2.2 billion in February, compared with an increase of $55.4 billion in January. The January change reflected the expiration of the Making Work Pay Credit provision of the American Recovery and Reinvestment Act of 2009, which had boosted federal withheld income taxes by $38.6 billion in January. The January change also reflected increased federal net nonwitheld income taxes (payments of estimated taxes plus final settlements less refunds), which had boosted January net withheld taxes by $11.3 billion. Disposable personal income (DPI) — personal income less personal current taxes — increased $36.0 billion, or 0.3 percent, in February, compared with an increase of $92.0 billion, or 0.8 percent in January.

Personal outlays and personal saving

Personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $69.8 billion in February, compared with an increase of $30.2 billion in January. PCE increased $69.1 billion, compared with an increase of $29.5 billion.

Personal saving — DPI less personal outlays — was $676.7 billion in February, compared with $710.5 billion in January. Personal saving as a percentage of disposable personal income was 5.8 percent in February, compared with 6.1 percent in January. For a comparison of personal saving in BEA’s national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and data on changes in net worth, go to http://www.bea.gov/national/nipaweb/Nipa-Frb.asp

Real DPI, real PCE and price index

Real DPI — DPI adjusted to remove price changes — decreased 0.1 percent in February, in contrast to an increase of 0.5 percent in January.

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. Purchases of durable goods increased 1.4 percent, compared with an increase of 0.2 percent. Purchases of motor vehicles and parts accounted for most of the increase in durable goods in February. Purchases of nondurable goods increased 0.4 percent in February, in contrast to a decrease of 0.1 percent in January. Purchases of services increased less than 0.1 percent, in contrast to a decrease of 0.1 percent.

PCE price index — The price index for PCE increased 0.4 percent in February, compared with an increase of 0.3 percent in January. The PCE price index, excluding food and energy, increased 0.2 percent, the same increase as in January.

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