U.S. Personal Income Rises 0.9% in January

Personal income in the United States increased by $221.9 billion (0.9%) in January, reflecting strong growth in wages, personal transfer receipts, and income from assets, according to the latest report from the U.S. Bureau of Economic Analysis (BEA). Disposable personal income (DPI), which measures income after taxes, also rose 0.9% ($194.3 billion).

Despite higher incomes, personal consumption expenditures (PCE) declined by 0.2% ($30.7 billion), signaling a pullback in consumer spending. The drop was largely due to a sharp $76.7 billion decline in goods spending, while services spending increased by $46.0 billion.

Savings and Inflation Trends

Personal outlays, including spending, interest payments, and transfer payments, fell by $52.7 billion in January.
The personal savings rate stood at 4.6%, with total savings reaching $1.01 trillion.
The PCE price index, the Fed’s preferred inflation gauge, rose 0.3% month-over-month, while the core PCE index (excluding food and energy) also climbed 0.3%.
Year-over-year, the PCE price index increased 2.5%, with core PCE inflation at 2.6%, reflecting persistent price pressures.

Economic Outlook

The increase in personal income suggests a resilient labor market, while the decline in spending hints at consumer caution amid economic uncertainties. With inflation still above the Fed’s 2% target, policymakers will closely monitor these trends as they evaluate potential interest rate adjustments in the coming months.

Source: Bureau of Economic Analysis

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