Consumer Spending, Personal Income Both up 0.1%, For November 2011

The Personal Income and Outlays report for November covers individual income, consumption and savings. Consumer spending increased 0.1% while disposable income had no change. Personal income increased 0.1% There are two things to garner from this month’s numbers. Consumer spending is mute and wages, salaries declined. Additionally, that great Black Friday record sales hype is not materializing in the aggregate spending numbers to date, as we pointed out in the retail sales overview. The personal income & outlays report is seasonally adjusted.

Personal consumption expenditures are often called consumer spending and in real dollars, or adjusted for price increases, is up 0.2% for November. Real Personal Consumption Expenditures, or PCE, are about 70% of GDP, and a monthly 0.2% increase is mediocre for Q4 GDP growth implications. Real means chained to 2005 dollars, or adjusted for inflation and are the values which are part of GDP. Below is a graph of real PCE.

Consumer spending is not just smartphones, toys and Starbucks. Things like housing, healthcare, food, gas are part of consumer spending. Consumer spending for the majority is spending to pay basic living necessities. Graphed blow is the overall real PCE monthly percentage change.

Here’s what people spent money on in November, adjusted for prices, or in real dollars. Health care, for example, is a service. Gasoline is a nondurable good.
Purchases of durable goods increased 1.1% in November, compared with an increase of 1.3% percent in October. Purchases of nondurable goods decreased 0.1%, in contrast to an increase of 0.2%. Purchases of services increased 0.1%, in contrast to a decrease of less than 0.1%.
Price indexes are used as divisors to adjust for inflation and price changes. The indexes are used to compute spending and income for an apples to apples, real dollar comparison to previous months and years. Economic statisticians use real dollars so one does not erroneously assume economic growth when it’s really inflation. The PCE price index had no change for the month, but is up +2.5% for the year. Minus energy and food, the price index increased +0.1% and is also up +1.7% for the year. The energy price index decreased –1.6% for November and is up 13.1% for the year. Anyone at the pump knows there is finally relief on gas prices recently. The food price index decreased -0.1% for the month and is up +5.0% for the year. While the PCE price index represents inflation, it is different from CPI.
Personal income increased +0.1% in November and these numbers are the total for everybody in the United States who is reported and not part of the underground economy. Below is personal income, not adjusted for inflation, or price changes.

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Consumer Spending, Personal Income both up 0.1%, for November 2011. (2011, December 23). Robert Oak. Retrieved from


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