**MNI 5 Things: US Core PCE Prices Show No Surprises>

--5 Things We Learned From January Personal Income Data

By Kevin Kastner, Holly Stokes, and Sara Haire

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

January personal income, spending, and price data released Thursday by 

the Bureau of Economic Analysis: 

     - The personal income and spending data suggest core inflation 

remains contained, with no changes in the year/year rate ahead of 

the March FOMC meeting. As a result, markets will likely have little 

reaction to the data. 

     - The core PCE price index rose 0.3%, (+0.271% unrounded), as 

expected, after a 0.2% gain (+0.167%) in December. While the monthly 

gain was the strongest since January 2017, the y/y rate held steady at 

+1.5% for the fourth straight month, significantly below the 1.9% y/y 

rate seen in early 2017. The overall PCE price index rose 0.4% after a 

0.1% December gain, as energy prices rebounded by 3.0% in the current 

month. The y/y rate held steady at 1.7 for the third straight month. 

     - The savings rate rebounded to 3.2% after dropping down to a 

recent low of 2.5% in December, but it remains well below the 3.7% rate 

a year ago. Some analysts note that the declines in the savings rate 

over the last year have been a key support for consumption, as consumers 

are confident enough about the economy and the job market to shift from 

saving to spending. 

     - Personal income rose 0.4%, above the 0.3% gain expected, led by a 

solid gain in wages and salaries and a sharp rise in personal current 

transfer receipts, as minimum wage increases and a cost-of-living 

increase in Social Security helped prop up income. Personal taxes 

plunged 3.3% due to the new tax law, so disposable personal income rose 

0.9%, the strongest gain since January 2017. 

     - Current dollar PCE was up 0.2%, as expected. However, real PCE 

fell 0.1% after a 0.2% gain in December, so the January level was up 

only 0.7% at an annual rate from 4Q. PCE was up 3.8% in the fourth 

quarter GDP report. 

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

[TOPICS: MAUDS$,M$U$$$,MAUDR$]