Consumer Sector Continues Improvement

The consumer sector continues to improve with gains in income and spending but inflation remains weak. Personal income advanced 0.4 percent in November after growing 0.3 percent in October. The wages & salaries component increased 0.5 percent, following a gain of 0.3 percent the month before.

Personal spending grew 0.6 percent, following 0.3 percent in October.

Strength was in durables which jumped 1.6 percent, following a rise of 0.3 percent in October. Nondurables were unchanged in November after decreasing 0.3 percent the prior month. Services improved 0.6 percent after rising 0.4 percent in October.

PCE inflation continues to be weak-largely due to lower energy costs. Headline inflation posted at a minus 0.2 percent on a monthly basis, following no change in October. Core PCE inflation was flat in November, following a 0.2 percent rise in October.

On a year-ago basis, headline PCE inflation eased to 1.2 percent in November from 1.4 percent the prior month. Year-ago core inflation came in at 1.4 percent in November compared to 1.5 percent in October. Both series remain below the Fed goal of 2 percent year-ago inflation.

Overall, the consumer sector is slowly improving even though inflation is below the Fed's goal. In fact, lower gasoline prices are improving discretionary income and boosting spending elsewhere.

Recent History Of This Indicator:
Personal income grew 0.2 percent in October after advancing 0.2 percent in September. The wages & salaries component gained 0.3 percent after increasing 0.2 percent the month before. Personal spending gained 0.2 percent after no change in September. Strength was in services which rose 0.3 percent, matching the September pace. Nondurables rebounded 0.2 percent in October after decreasing 0.3 percent the prior month. Durables dipped 0.2 percent after falling 1.1 percent in September. PCE inflation continues below Fed goal. Headline inflation rose only 0.1 percent on a monthly basis, matching the September number. Core PCE inflation gained 0.2 percent, following a 0.1 percent rise in September. On a year-ago basis, headline PCE inflation held steady at 1.4 percent in October. Year-ago core inflation posted at 1.6 percent in October versus 1.5 percent in September.