Disposable personal income increased US$19.8 billion

According to the Bureau of Economic Analysis, US personal income grew US$9.0 billion in January 2022.

Personal consumption expenditures (PCE) climbed US$337.2 billion, while disposable personal income (DPI) increased US$19.8 billion. In January, the real DPI fell 0.5 per cent, while the real PCE rose 1.5 per cent with goods increasing 4.3 per cent and services increasing 0.1 per cent.

The PCE price index grew by 0.6 per cent for the month. The PCE price index grew 0.5 per cent excluding food and energy.

In January, the increase in personal income was mostly due to an increase in compensation, which was somewhat offset by a reduction in government social benefit. Within compensation, the increase represented wage and salary increases in both the private and government sectors.

Fall in other social benefits

A fall in “other” social benefits (marking the suspension of advance Child Tax Credit payments as approved under the American Rescue Plan) was partially offset by a rise in Social Security benefits within government social benefits (reflecting a 5.9 per cent cost-of-living adjustment).

The US$337.2 billion increase in current-dollar PCE in January reflected a US$285.4 billion increase in goods spending and a US$51.8 billion increase in services spending. Increases in goods were widespread, with motor vehicles and components, “other” nondurable goods, and recreational goods and vehicles leading the way.

Spending on housing and utilities was the major contributor to the growth in services. In January, personal spending climbed by US$342.2 billion.

In January, personal savings were US$1.17 trillion, with a 6.4 per cent personal saving rate (savings as a percentage of disposable personal income). The PCE price index grew 6.1 per cent in January compared to the same month last year, indicating rises in both goods and services.

Food prices jumped 6.7 per cent while energy prices increased 25.9 per cent. The PCE price index for January grew 5.2 per cent from a year ago, excluding food and energy.