Macro February 14, 2020 / 04:42 pm UTC

Preview: Due February 28 - U.S. January Personal Income, Spending and Core PCE Prices

By Dave Sloan

We expect a 0.1% increase in January’s core PCE price index, which would be below core CPI at 0.2%. This would mark a reversal from December's data when a 0.2% core PCE price index outperformed core CPI's 0.1% print. 

A weak January 2019 result would still result in core PCE prices rising to 1.7% y/y from 1.6% y/y. Meanwhile, more weak data are due to drop out in February. Overall PCE prices will likely match a 0.1% increase in the CPI, with growth increasing to 1.8% y/y from 1.6% y/y as weakness from a year ago drops out.

We expect to see 0.3% increases in both personal income and spending from January. Before rounding, however, we see income marginally outperforming, which would lift the savings rate to 7.7% from 7.6%.

Based on the non-farm payroll print, we expect a 0.4% increase in January's wages and salaries due to gains in employment and earnings. Retail sales increased by 0.3% in January, but a weather-induced dip in utilities will restrain services spending.

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I, Dave Sloan, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.