–US October Personal Income -0.7% After +0.7% in October, Savings Rate 13.6%
–Nominal PCE +0.5%, Real PCE +0.5%; Core Prices Flat
–November Michigan Sentiment Index Revised Down to 76.9, Expectations Tumble
By Kevin Kastner
WASHINGTON (MaceNews) – Personal income fell in October, reflecting the removal of the Lost Wages stimulus package that lifted income in September, one of the many pre-Thanksgiving economic data points Wednesday.
Personal income fell by 0.7% in October, well below the 0.1% increase expected, after a 0.7% increase in September.
The “other” transfer payments category, which includes the government stimulus measures, fell by $203.8 billion after a $243.3 billion surge in September. The Lost Wages Supplemental Payments program, funded by FEMA, lifted income in September, so the October drop reflects lower outlays from that program.
The further increase in nonfarm payrolls and a small uptick in hourly earnings in October helped lift wages and salaries by 0.7% after a 0.9% September increase.
Current transfer receipts fell by $252.6 billion after a $32.9 billion decrease in September. In addition to the “other” category, the regular unemployment insurance category, which reflects that state portion of jobless benefits, fell by $50.4 billion in the month.
Proprietors’ income rose by only $22.4 billion after a $90.9 billion increase in the previous month, as retail sales growth slowed. Rental income rose by $4.4 billion after a September increase of $8.8 billion.
Return on assets rose by $21.1 billion, with dividend income and interest income both higher.
The savings rate fell to 13.6% in October from 14.6% in September due to the drop in income and small increase in consumption.
On the spending side in October, current-dollar personal consumption expenditures rose by 0.5%, above the 0.4% gain expected and the smallest monthly increase since the recovery began.
Goods PCE was flat, while services PCE rose by 0.7% on health care services.
The PCE price index was flat in the month, so real PCE also rose by 0.5% following a 1.1% increase in September.
October PCE stands 6.1% at an annual rate above the third quarter average. Real PCE rose 40.6% in the third quarter.
Core PCE prices were also flat in October after a 0.2% increase in September. The year/year rate slipped to 1.4% from 1.6% in September.
Released at the same time, the Michigan Sentiment index for November was revised down to 76.9 from the 77.0 in the preliminary estimate, putting the reading further below the 81.8 index in October.
The current conditions was revised up to 87.0 from 85.8 in the preliminary estimate, but the expectations readings was revised down to 70.5 from 71.3 in the mid-month reading. Michigan said that a resurgence of COVID-19 cases and a shift in economic outlook as reasons for the downward revision to expectations.
They noted that Democrats suggested they have been impacted to a greater extent by the COVID-19 resurgence but were also more positive about the economic than Republicans after the election.
Also released at the same time, new single-family home sales fell by 0.3% to a 999,000 annual rate, above the 970,000 annual rate expected. The median home sales price fell to $330,600, up 2.5% from a year earlier.
In other data released earlier Wednesday morning, initial jobless claims rose by 30,000 to 778,000 in the November 21 week, lifting the four-week moving average by 5,000 to 748,500 after 16 straight declines.
The level of continuing claims fell by 299,000 to 6.071 million in the November 14 employment survey week, well below from 7.823 million in the October 17 employment survey week.
The declining level of continuing claims suggests that benefits continue to expire.
Also, third quarter GDP was unrevised at the 33.1% increase reported in the advance reading. Measures of residential and nonresidential fixed investment were both revised up, offsetting downward revision to PCE and government spending growth, a larger net export gap and a larger decline in business inventories.
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Contact this reporter kevin@macenews.com.
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