WASHINGTON — January personal income gained just 0.3% but underlying details were better, with a $42.4 billion gain in wages and salaries, far better than the $8.6 billion rise in December.
Private wages and salaries increased $39.7 billion, and government pay hikes accounted for $2.2 billion of the gain. These illustrate a growing wage base.
Moreover, income would have been better if not for a $12.8 billion drop in proprietors' income, a cut after a surge in December, and a $5.2 billion drop in receipts on assets (interest & dividends). Farm proprietors' income decreased $10.0 billion, accounting for much of the proprietors' income drop.
Rents and transfers were up, with the latter reflecting the 1.7% rise in Social Security COLA.
The 0.2% decline in personal consumption expenditures should be ignored as reflecting the moves in energy prices. Real PCE was solid at a 0.3% increase, suggesting Q1 real PCE could be growing north of 3% SAAR.
Real January services spending posted a 0.4% gain and outperformed. This reflected utilities spending during the harsh winter. Services spending should slow ahead but this will free cash to be used elsewhere.
Personal saving was $728.5 billion in January, putting the saving rate at 5.5%, compared with 5.0% in December. This illustrates that there is enough income to fuel both spending and saving.
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