WASHINGTON — Personal income rose 0.4% in December, while nominal PCE was up 0.4% and the core PCE price index rose 0.2% in the month and 1.5% year/year, all roughly as expected, data released by the Bureau of Economic Analysis Monday morning showed.
The core price index's 1.5% year/year rise in December was unchanged from November. The rate is the strongest since June, but significantly below the levels in early 2017 and the Fed's 2.0% target.
Analysts had expected personal income to rise only 0.3% in the month, but a 0.5% jump in wages and salaries and continued strong gains in interest income supported a larger gain. Nominal PCE and the core price index both came in as expected.
The saving rate fell to 2.4% in December from 2.5% in November, hitting its lowest point since 2.3% in September 2005. Some analysts have suggested that the plunge in the savings rate over the last year, from a 2017 high of 4.1% in February, has supported consumption. Consumers, confident about the economy and job prospects, have shifted their priorities from saving to spending.
Disposable personal income rose 0.3% in the month, while real disposable income was up 0.2%.
The 0.4% gain in current dollar PCE followed a 0.8% spike in November. Spending on durable goods were up 0.7% in the month, but nondurable goods spending fell 0.2% on a 1.2% decline in energy prices. Services spending was up 0.5%.
Real PCE up 0.3% in December after rising 0.5% in November, as the overall PCE price index rose only 0.1% due to the energy price drop. The overall price index was up 1.7% year/year, a slowdown from the 1.8% year/year rate in November.
After inflation adjustment, durable goods PCE was up 0.8% while nondurable goods PCE were flat, compared with the 0.2% nominal decline. Real services PCE was up 0.3%
