The Department of Commerce said on Thursday that both personal income and expenditures rose in November, while the savings rate fell.
Personal income saw a rise of 0.3%, and disposable personal income (DPI) also rose by 0.3%. Wages and salaries rose modestly, by $6.6 billion in November, compared with an increase of $31.2 billion in October. Supplements to wages and salaries were also up, although less than in October, by $2.7 billion.
Personal consumption expenditures (PCE) went up by 0.4%, outpacing income gains, and the rate of personal savings (disposable personal income (DPI) less personal outlays) fell as well. In November personal saving as a percentage of DPI was 5.3%; in October it was 5.4%.
Robert Dye, senior economist at PNC Economics Division, said in a statement that “consumer mojo is rising.” While wages and salaries “gained a meager 0.1% for the month, just keeping pace with inflation,” he noted that farm income “continued to show robust gains supported by higher crop prices. Interest income popped up in October and November as the yield curve steepened.”
Real disposable income, adjusted for inflation and taxes, amounted to an increase of 0.2% “for the second straight month,” Dye added. Real consumer spending, he pointed out, rose 0.3% for the month and was led by nondurable goods consumption.
“With spending outpacing income, the personal saving rate dipped from 5.4% to 5.3% in November,” the PNC economist pointed out. “This is well below the peak 8.2% saving rate from May 2009 and can be interpreted as a sign that consumers are starting to have more faith in improving economic conditions.”
Dye added that this evaluation is borne out by the University of Michigan Consumer Sentiment Index, also released Thursday, indicating an increase from 74.1 in November to 74.5 in December.
Personal income in November 2010 rose 0.3 percent. Nominal personal consumption expenditures (PCE) increased 0.4 percent and real PCE rose 0.3 percent. Nominal disposable income (DPI) increased 0.3 percent and real DPI rose 0.2 percent. The personal savings rate as a percentage of DPI was 5.3 percent in November.