Personal Income & Expenditures Stable in November 2010

The BEA (Bureau of Economic Analysis, U.S. Dept. of Commerce) reports that Personal Income and Personal Income Expenditures increased in November 2010.  The headlines:

Personal income increased $42.3 billion, or 0.3 percent, and disposable personal income (DPI) increased $37.8 billion, or 0.3 percent, in November, according to the Bureau of Economic Analysis.  Personal consumption expenditures (PCE) increased $43.3 billion, or 0.4 percent. In October, personal income increased $49.5 billion, or 0.4 percent, DPI increased $39.3 billion, or 0.3 percent, and PCE increased $68.9 billion, or 0.7 percent, based on revised estimates.

Real disposable income increased 0.2 percent in November, the same increase as in October. Real PCE increased 0.3 percent in November, compared with an increase of 0.5 percent in October.

This data accounts for over 2/3rds of GDP.  This is the second report going into 4Q2010, and already we are seeing better data than 3Q2010.  The challenge in reviewing this data is to spot significant trends.

At first glance, you will notice the BEA population is 2+ million too high – a problem shared by all government agencies (one analysis here).   But for the most part it is hard to spot trends.   Looking at simply MoM change, the lack of trends become obvious.

Three month trends are circled in red if they are down, and green if up.  You will note lack of trends in expenditures which are the basis of GDP.  However, the first two months of expenditure increase in 4Q2010 already exceeds the entire increase in 3Q2010.  This bodes well for 4Q2010 GDP.

Please note: The numbers in this analysis are seasonally adjusted and annualized.   Based on other BEA analysis, the seasonal adjustment factors are likely slightly off.  Evidence of this is the noise (variations) MoM in the data.  However, on a positive note, there is nothing in the data considered negative or pointing to the gain in personal expenditures in 4Q2010 GDP being lower than 3Q2010.

Personal income increased $42.3 billion, or 0.3 percent, and disposable personal income (DPI)
increased $37.8 billion, or 0.3 percent, in November, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $43.3 billion, or 0.4 percent.  In October,
personal income increased $49.5 billion, or 0.4 percent, DPI increased $39.3 billion, or 0.3 percent,
and PCE increased $68.9 billion, or 0.7 percent, based on revised estimates.

Real disposable income increased 0.2 percent in November, the same increase as in October.  Real
PCE increased 0.3 percent in November, compared with an increase of 0.5 percent in October.
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