**MNI 5 THINGS: US Aug Core PCE Price Index Flat; Y/Y +2.0%>

--5 Things We Learned From August Personal Income Data         

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the August 

personal income, spending, and price data released Friday by the Bureau 

of Economic Analysis: 

     - The data suggest inflation is well contained, with the year/year 

rate for the core measure holding steady at 2.0% rounded for the fourth 

straight month and the overall PCE price index moving down to +2.2% y/y. 

Personal income growth, nominal PCE, and core prices were all below 

expectations, so markets are likely to view the data as tame. 

     - The core PCE price index flat m/m (+0.037% unrounded), below the 

expected 0.1% gain, after a 0.2% gain (+0.167%) in July. The y/y rate 

stayed at 2.0% for the fourth straight month (+1.959% unrounded vs 

+2.025% in July) after the June y/y rate was revised up to +2.0% after 

rounding (+1.951% unrounded). The overall PCE price index was +0.1% m/m 

after +0.1% in July despite a 1.9% surge in energy prices. The PCE price 

index y/y rate fell to +2.2% from +2.3%. 

     - Current dollar PCE was +0.3%, below the +0.4% expected, pulled 

lower by durable goods spending, while nondurable goods spending and 

services spending were both up. Real PCE was +0.2% after a +0.3% in 

July. 

     - An MNI calculation shows that real PCE over the first two months 

of the third quarter was +3.1% SAAR from the second quarter average, and 

was +3.7% after an adjustment for only having two months of data, 

indicating a slowdown from the 3.8% PCE pace in the second quarter 

reported on Thursday. 

     - Personal income was +0.3%, below the +0.4% expected, despited a 

solid 0.5% gain in wages and salaries. Return on assets, particularly 

interest income, declined in the month, offsetting gains in other income 

categories. Personal taxes were +8.8% after a +6.4% in July. Disposable 

personal income was +0.3% while real disposable income +0.2%. The 

savings rate stayed at 6.6%. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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