Preview: Due January 26 - U.S. December Personal Income and Spending - Q4 totals to be confirmed, PCE prices seen softer than CPI
December’s personal income and spending report will be largely old news with Q4 totals due with the GDP report on January 25. Looking at existing December data we expect gains of 0.3% in personal income, 0.5% in personal spending and 0.2% in core PCE prices.
CPI increased by 0.3% in December, both overall and ex food and energy, but recently CPI has been outperforming PCE price data, where we expect December gains of only 0.2% both overall and ex food and energy.
In fact we expect the December PCE gains to be marginally below 0.2% both overall and ex food and energy before rounding even though CPI gains were very marginally above 0.3% in both series. Yr/yr PCE prices would then remain at 2.6% but the core rate would slow to 2.9% from 3.2%.
In the personal income detail we expect a 0.4% rise in wages and salaries with a dip in the workweek weighing against strong gains in employment and average hourly earnings. We expect the other components of personal income to be in line with trend, after a weak November corrected a strong October.
Retail sales increased by 0.6% in December but we expect a slightly slower 0.4% rise in services, with real spending in services increasing by 0.2% for a fourth straight month. This would leave overall spending up by 0.5% in nominal terms, outpacing personal income.
