MNI DATA ANALYSIS: US December Income +0.4%; PCE +0.4%>

--Core PCE Price Index +0.2%;Y/Y Remains at +1.5%.

By Kevin Kastner, Sara Haire, and Holly Stokes

     WASHINGTON (MNI) - Personal income rose 0.4% in December, while 

nominal PCE was up 0.4% and the core PCE price index rose 0.2% in the 

month and 1.5% year/year, all roughly as expected, data released by the 

Bureau of Economic Analysis Monday morning showed. 

     The core price index's 1.5% year/year rise in December was 

unchanged from November. The rate is the strongest since June, but 

significantly below the levels in early 2017 and the Fed's 2.0% target. 

     Analysts had expected personal income to rise only 0.3% in the 

month, but a 0.5% jump in wages and salaries and continued strong gains 

in interest income supported a larger gain. Nominal PCE and the core 

price index both came in as expected. 

     The saving rate fell to 2.4% in December from 2.5% in November, 

hitting its lowest point since 2.3% in September 2005. Some analysts 

have suggested that the plunge in the savings rate over the last year, 

from a 2017 high of 4.1% in February, has supported consumption. 

Consumers, confident about the economy and job prospects, have shifted 

their priorities from saving to spending. 

     Disposable personal income rose 0.3% in the month, while real 

disposable income was up 0.2%. 

--ENERGY PCE PRICES DROP

     The 0.4% gain in current dollar PCE followed a 0.8% spike in 

November. Spending on durable goods were up 0.7% in the month, but 

nondurable goods spending fell 0.2% on a 1.2% decline in energy prices. 

Services spending was up 0.5%.   

     Real PCE up 0.3% in December after rising 0.5% in November, as the 

overall PCE price index rose only 0.1% due to the energy price drop. The 

overall price index was up 1.7% year/year, a slowdown from the 1.8% 

year/year rate in November. 

     After inflation adjustment, durable goods PCE was up 0.8% while 

nondurable goods PCE were flat, compared with the 0.2% nominal decline. 

Real services PCE was up 0.3% 

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

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