Economist's Commentary: March 28, 2008
Quick Take on the Economy: March 28, 2008
By Lawrence Yun, Chief Economist
Today's Quick Take focuses on personal income, personal consumption, savings, and inflation.
Personal Income
- The aggregate personal income in the U.S. grew by 0.5% in February — the best monthly gain in seven months, but the gain was dominated by transfer income from the government.
- Wages and Salary grew 0.3%.
- Proprietor’s income fell 0.5%.
- Transfer receipts from governments rose 2.2%.
- From a year ago, personal income rose 4.6% — the slowest pace in over two years, but comfortably higher than the 2% growth during the last recession.
Personal Consumption
- Personal consumption rose 0.1% during the month and was higher by 5.1% from a year ago.
- The gains are slower than the norm but do not yet suggest recessionary conditions.
- Consumption for durable goods fell for the second straight month. The anxiety over recession usually precipitates a fall in durable goods spending.
Savings
- With income outpacing consumption in the latest month, the savings rate rose to 0.3% of disposable income.
- Savings had been zero or negative in the prior three months.
- The savings rate is still very low. It was less than 1% from 2005 to 2007. It had been about 2% from 2000 to 2004. It had ranged from 7% to 11% throughout the 1970s and 1980s.
Inflation
- Aside from CPI (consumer price index), inflationary conditions are also assessed from price changes in personal consumption expenditure (PCE). The Fed closely watches the PCE price index.
- PCE price inflation was tamer with only a 0.1% gain over the latest month and a 3.4% gain from a year ago.
- Core PCE price inflation rose 0.1% over the month and by 2.0% from a year ago – a mild deceleration from the 2.1% rise in all of 2007.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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