U.S. personal consumer expenditures (PCE) rose 0.8% ($130.5 billion) last month, coinciding with an uptick in personal income of 0.2% ($35.5 billion) and a 0.1% increase in disposable personal income (DPI) ($18.9 billion), the Bureau of Economic Analysis reported on Friday (Oct. 1).
The increase in spending reflected $66 billion for goods — food, beverages and nondurable goods like household supplies and recreational items — and $64.6 billion for services, which was spread across personal care, clothing services, housing and utilities, and healthcare.
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August’s PCE price index was up 4.3% from last year, reflecting increases in both goods and services. Energy prices increased 24.9% and food prices increased 2.8%. Subtracting food and energy, the PCE price index was up 3.6% from last year at this time.
“Households have the wherewithal to spend,” Joe Brusuelas, chief economist at RSM US LLP, told The Wall Street Journal. “Demand should remain robust over the next two to three years as growth continues well above the long-term trend.”
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The increase in personal income in August largely came from boosted wages from employers and from government social benefits, such as the advance Child Tax Credit payments. The increase in government social benefits was offset by the decline in payments from the Pandemic Unemployment Compensation program.
Personal savings totaled $1.71 trillion in August, and the personal savings rate (as a percentage of disposable personal income) was 9.4%, the BEA reported.
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The Conference Board’s Consumer Confidence Index fell for the second month in a row, PYMNTS reported on Tuesday (Sept. 28), down to 109.3 in September after being revised to 115.2 in August. September brought about new concerns about the economy, in addition to worries about short-term growth prospects.
