The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income increased 0.3% in March. The pace of personal income growth slowed after reaching a 0.8% monthly gain in October. Gains in personal income are largely driven by increases in compensation, personal income receipts on assets, and rental income.
Real disposable income, income remaining after adjusted for taxes and inflation, inched up 0.3% in March. On a year-over-year basis, real (inflation adjusted) disposable income rose 4%, after experiencing negative year-over-year growth from March 2021.
Personal consumption expenditures (PCE) stayed flat in March after a 0.1% increase in February. Real spending, adjusted to remove inflation, decreased less than 0.1% in March, mainly driven by decreasing in spending on goods.
While remaining low historically, the December personal savings rate inched up to 5.1% the highest level since January 2022. As Inflation has almost wiped-out compensation gains, people are dipping into savings to support spending.
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