Surge in US Personal Income and Spending: Core PCE Remains Stable in September 2023

In September 2023, personal income in the US increased by $77.8 billion (equivalent to 0.3%), expenditures surged by $138.7 billion (0.7%), and the Core PCE inflation rate remained constant at 0.3%.

Highlights

• In September 2023, US personal income increased by $77.8 billion, a 0.3% monthly rise.

• Personal spending saw a substantial surge of $138.7 billion, marking a 0.7% increase, highlighting strong consumer activity.

• The Core PCE price index stayed steady, with a 0.3% increase in September, signaling consistent inflation patterns.

Increase in Income and Expenditure

In September 2023, the United States witnessed a notable $77.8 billion surge in personal income, representing a 0.3 percent monthly rise. Concurrently, disposable personal income (DPI) saw a comparable 0.3 percent increase of $56.1 billion. On the spending front, personal expenditures surged by $138.7 billion, equivalent to a 0.7 percent rise.

Shifts in Price Indexes

September saw a 0.4 percent uptick in the PCE price index, with both goods and services experiencing varying changes. Goods prices rose by 0.2 percent, while services saw a steeper increase of 0.5 percent. Specifically, food prices rose by 0.3 percent, and energy prices exhibited a substantial 1.7 percent increase. Even excluding food and energy, the Core PCE price index still increased by 0.3 percent.

Rise in Real Personal Consumption Expenditure (PCE)

While real DPI experienced a slight 0.1 percent dip in September, real PCE displayed resilience, showcasing a 0.4 percent increase. This growth was propelled by a 0.5 percent rise in goods expenditure and a 0.3 percent uptick in services spending. Vehicle-related purchases, both new and used, played a significant role in boosting goods expenditure, whereas international travel expenses contributed notably to the rise in services spending.

Personal Savings and Expenditures

In September, personal outlays, encompassing PCE, personal interest payments, and personal current transfer payments, surged by $175.1 billion. Concurrently, personal savings reached $687.7 billion, maintaining a steady personal saving rate of 3.4 percent.

Price Trends Over Time

Compared to the same month one year ago, the PCE price index for September exhibited a 3.4 percent increase. This was driven by a 0.9 percent rise in goods prices and a substantial 4.7 percent increase in services prices. Food prices experienced a 2.7 percent increase, whereas energy prices remained relatively stable. Excluding food and energy, the PCE price index showed a 3.7 percent year-on-year increase.

Updates and Revisions

It is important to note that estimates for July and August have undergone revisions, leading to slight adjustments in previous figures for personal income, DPI, and PCE. These updates present a clearer picture of the recent trends in income and expenditure.