December 2018 and some of January 2019 Income and Outlays

Echoes from the partial government shutdown persist.  Income and outlays data from the Bureau of Economic Analysis were delayed for December and incomplete for January, so they were released together in one report.  We have both income and spending to end the year, but just income data to start 2019.

Personal income was mixed in the two periods.  American workers made 1.0 percent more in December.  Stripping out taxes, disposable income rose 1.1 percent.  These upticks were mostly reflective of dividend increases, growing aggregate employee pay, and better farmers’ income which received a large subsidy payment from the Department of Agriculture’s Market Facilitation Program. 

Personal income in January dipped 0.1 percent and disposable income declined 0.2 percent. Unlike a month earlier, dividends and farmers’ income dropped.  Personal interest income was lower as well.  However, these were partially offset by increases in social security benefit payments that were related to cost of living adjustments.

Outlays were down in December.  Personal consumption expenditures (PCE) fell $77.9 billion to end the year.  Consumers spent $67.2 billion less on goods, and outlays for services dropped $18.2 billion.  Falling outlays combined with rising income pushed consumers savings up to $1.21 trillion, and the personal savings rate as a percent of disposable income to 7.6 percent.

Since we only have data on December expenditures, there is only inflation data for that period as well.  The PCE price index increased 0.1 percent to end the year.  Excluding food and energy, core-PCE rose 0.2 percent.  Versus a year earlier, the PCE slowed to 1.7 percent and the core measure matched November’s tally of 1.9 percent.

Incomplete data makes it tougher to know how the economy truly fares.  On the other hand, complete data, often revised, won’t help matters much either!  That said, Atlas sees many signs of deceleration, and this indicator represents another one, but we are missing information about a large chunk of America’s output with this incomplete release.  Things will clear up in the months ahead as the echoes of the partial shutdown are drowned out by the cacophony of business as usual.