Personal Income and Outlays Increase

Personal income increased $90.4 billion (0.4 percent) in November according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $70.4 billion (0.4 percent) and personal consumption expenditures (PCE) increased $104.7 billion (0.6 percent).

Real DPI decreased 0.2 percent in November and Real PCE increased less than 0.1 percent; spending on services increased 0.5 percent and spending on goods decreased 0.8 percent (tables 5 and 7). The PCE price index increased 0.6 percent. Excluding food and energy, the PCE price index increased 0.5 percent.

 The estimate for November personal income and outlays reflected the continued economic recovery and government response to the COVID-19 pandemic. Government social benefits increased in November, reflecting an increase in the Provider Relief Fund (extended by the American Rescue Plan) that was partly offset by declines in many other pandemic-assistance programs. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. 

The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase reflected increases in both private and government wages and salaries. Within government social benefits, an increase in "other" benefits (notably, an increase in the Provider Relief Fund to health care nonprofits) was partly offset by a decrease in unemployment insurance.

The $104.7 billion increase in current-dollar PCE in November reflected an increase of $97.4 billion in spending for services and a $7.4 billion increase in spending for goods (table 3). The increase in services was widespread, led by housing and utilities. Within goods, an increase in nondurable goods (mainly gasoline and other energy goods) was partly offset by a decrease in durable goods (led by recreational goods and vehicles as well as motor vehicles and parts).

Personal outlays increased $106.3 billion in November (table 3). Personal saving was $1.25 trillion in November and the personal saving rate-personal saving as a percentage of disposable personal income-was 6.9 percent.

The PCE price index for November increased 5.7 percent from one year ago, reflecting increases in both goods and services (table 11). Energy prices increased 34.0 percent while food prices increased 5.6 percent. Excluding food and energy, the PCE price index for November increased 4.7 percent from one year ago.

 

U.S. Durable Goods Orders Increase More Than Forecast

Orders placed with U.S. factories for durable goods rose in November by the most in six months, exceeding forecasts and pointing to steady demand that will help drive production growth in early 2022.

Bookings for all durable goods -- or items meant to last at least three years -- increased 2.5% from the prior month, partly reflecting a sharp rise in commercial aircraft orders. 

The value of core capital goods orders, a proxy for business investment in equipment that excludes aircraft and military hardware, fell 0.1% after an upwardly revised 0.9% increase in October, Commerce Department figures showed Thursday.

The median estimate in a Bloomberg survey of economists called for a 0.7% increase in core capital goods orders and a 1.8% rise in total durables bookings. 

Despite the softer results in business equipment orders, the strength in prior months illustrates a robust pattern of private investment aimed at bolstering productivity and production capacity. Amid lean inventories, near-record job vacancies and a challenging supply network, companies are looking to enhance efficiency.

Meantime, inflation-adjusted household spending stagnated in November as the fastest price gains in nearly four decades eroded purchasing power. Purchases of goods and services, after adjusting for higher prices, were little changed following a 0.7% gain in October, separate Commerce Department figures showed Thursday. 

The durables data showed bookings for commercial aircraft increased 34.1%. Boeing Co. reported 109 orders in November, up from 10 a month earlier. The government data on aircraft orders don’t always align exactly with the corporate figures.

Orders for motor vehicles rose 1%. Durable goods orders excluding transportation equipment increased 0.8%.

Outside of the more volatile transportation categories, the report was mixed. Bookings for metals and communications equipment increased, while those for machinery, electrical equipment and computers eased.

Unfilled orders for manufactured durable goods, a measure of backlogs, rose 0.7%. Inventories, meantime, increased 0.6%. 

Core capital goods shipments, a figure that will be used to calculate investment in the government’s fourth-quarter gross domestic product report, rose 0.3% in November.

Orders for defense capital goods, a volatile component, jumped 16%, while total durable goods bookings minus military equipment rose 2%.