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Free Access**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$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.