US: Saving rate up again, PCE core inflation unremarkable – Standard Chartered

Analysts at Standard Chartered point out that US February personal consumption expenditure (PCE) data showed some reversal in the wages and salaries component, to 0.5% from 0.6% in January.

Key Quotes

“Disposable income increased by 0.2% after January’s 0.6% jump, likely helped by one-time bonuses. The PCE deflator was 1.8%, slightly higher than the 1.7% expected, resulting in a slight drop in real personal spending. The saving rate increased to 3.4% from 3.2% in January after 2.4% in December, suggesting that US consumers are not responding to the additional income from the Tax Cuts and Jobs Act (TCJA) in the profligate manner some had feared.”

“Spending on goods increased more than on services, but core goods prices edged higher only 0.14% y/y compared with January, while services prices moderately accelerated to 2.5% y/y.”