US: Personal Income stronger in December - Wells Fargo

According to analysts from Wells Fargo, personal income closed 2017 on a strong note after a 0.4% rise in December while personal spending increased 0.4%.

Key Quotes: 

“Personal income increased a better than expected 0.4 percent in December with no change reported to the 0.3 percent print in November. Meanwhile, disposable personal income increased 0.3 percent while real disposable personal income increased 0.2 percent after a flat month reported for November.”

“Clearly, personal income, specifically real personal disposable income, has improved since its weak performance in late 2016 and early 2017. However, both measures continue to trail the growth rate of real spending, which improved further in the last quarter of the year.”

“The U.S. consumer will need to see continuous growth in income over the year in order to be able to continue to keep up the current pace of consumption. It is true that the gains in consumer confidence as well as in financial (stock market) and housing wealth are making Americans feel much better today than they were previously.”

“Personal spending was in line with expectations in December, up 0.4 percent. However, the November measure, which was originally reported at 0.6 percent, was revised to an increase of 0.8 percent. This means that November was a very strong month for consumption. In real terms, personal spending increased a weaker than expected 0.3 percent in December but the November number was upwardly revised to an increase of 0.5 percent.”

“Consumer prices, as measured by the PCE deflator, were in line with expectations, increasing 0.1 percent for the overall index and 0.2 percent for the PCE deflator excluding volatile items like food and energy. Thus, even inflation behaved well at the end of the year, supporting higher real income as well as higher real spending.”