Personal income increased $11.4 billion, or 0.1 percent, and disposable personal income (DPI) decreased $47.6 billion, or 0.4 percent, in January, according to the Bureau of Economic Analysis. The decrease in DPI reflected an increase in federal nonwithheld income taxes. Personal consumption expenditures (PCE) increased $52.4 billion, or 0.5 percent. In December, personal income increased $41.2 billion, or 0.3 percent, DPI increased $40.3 billion, or 0.4 percent, and PCE increased $26.4 billion, or 0.3 percent, based on revised estimates.
Let's go to the data:
Service wages are up, and have been increasing for most of last year. However,
Goods producing industries are seeing their wages stall. This makes sense, given that manufacturing employment is taking a massive hit during this recession.
After five months of increases, disposable personal income dropped.
Note that total PCEs (personal consumption expenditures) have been increasing since July.
Service expenditures -- which account for about 65% of total PCEs -- are a large reason for that increase.
Non-durable purchases appear to have stalled, but are still at higher levels than lase year.
Durable goods purchases have been increasing for the last four months. This is very good news as it indicates cash for clunkers did not skew purchases forwarded as feared.