US Personal Income and Expenditures Rise in Nov 2024
Disposable income and spending on goods lead economic indicators
According to the latest data released by the U.S. Bureau of Economic Analysis, personal income in the United States increased by $71.1 billion, or 0.3 percent, in November 2024, signaling an upward trend in the nation's economic recovery.
While announcing a cut in the interest rate for the third successive time on Wednesday, the U.S. Federal Reserve hinted at concern over inflation which is still beyond the 2 percent target. Fed Reserve chair Jerome Powell said the number of interest rate cuts in 2025 may be moderated to two instead of the earlier announced four.
The country's Gross Domestic Product (GDP) numbers have been encouraging. The latest report from the BEA shows that the country's economy grew by a robust 3.1 percent, beating expectations.
The report, covering economic activities for the month, highlighted a notable rise in disposable personal income (DPI) and personal consumption expenditure (PCE), reflecting continued consumer confidence and spending resilience.
Economic Indicators Strengthen
The increase in personal income primarily came from higher compensation rates, although this was partially offset by declines in income from assets and personal transfer receipts. Disposable income, adjusted for taxes, also grew by $61.1 billion or 0.3 percent. Notably, consumer spending, which encompasses all personal consumption expenditures, advanced by $81.3 billion or 0.4 percent. This growth was significantly driven by a $48.3 billion surge in goods spending, led by automotive and recreational goods, while service expenditures increased by $33 billion, with significant contributions from financial services and healthcare.
Sectoral Spending Trends
Within the goods category, the most substantial increases were seen in motor vehicles and recreational products, including high-tech equipment. The services sector saw the most substantial spending increases in financial services and recreational activities like gambling and membership clubs.
Inflation indicators showed a moderate increase, with the PCE price index rising by 0.1 percent in November. Food and energy prices each increased by 0.2 percent. Excluding these volatile components, core PCE inflation, which provides a clearer picture of the trend, also edged up by 0.1 percent. Over the past year, the overall PCE price index has risen by 2.4 percent, with core PCE inflation at 2.8 percent, suggesting a stable inflationary environment conducive to sustained economic growth.
Savings and Future Outlook
The personal saving rate stood at 4.4 percent, with total savings reaching $968.1 billion in November. These figures underscore a robust economic backdrop where consumers balance spending with saving, indicating healthy financial behaviors.
As the year progresses, economic analysts and policymakers will closely watch these trends to gauge the potential need for adjustments in fiscal policy or interest rates. The next economic update, detailing December's figures, is scheduled for release on January 31, 2025.
