From Jan Hatzius' instanalysis on Personal Consumption data.
1. Nominal consumer spending increased by 0.7% mom in February, but part of the large increased reflected price gains. Real consumer spending increased by 0.3% mom after an unchanged reading in January. The latest real consumption figures - including revisions to earlier months - point to growth for Q1 as a whole of approximately 1.75-2.0% qoq annualized. This compares to our current forecast of +3.0%. The report therefore implies significant downside risk to our Q1 GDP estimate of +3.5% qoq annualized.
2. Nominal personal increase increased by 0.3% in February, slightly less than expected. However, income growth in January was revised up to +1.2% mom from 1.0% previously. Real disposable income - income adjusted for taxes and price change - fell by 0.1% during the month.
3. The Personal Consumption Expenditures (PCE) price index rose by 0.4% mom or 1.6% yoy, as expected. The core PCE price index rose by 0.2% mom (0.155% unrounded) or 0.9% yoy. The monthly growth rate was moderately below our forecast (+0.20% unrounded), but nevertheless confirms signs of firming in this inflation gauge. Growth in the market-based core PCE - which strips out non-market prices estimated by the Commerce Department - also accelerated to +0.17% mom from 0.12% in January.
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