Consumer Income Falls

U.S. consumer spending was nearly flat as the economy moved into the fourth quarter. Personal incomes fell in September, a sign the the holiday retail period may be in trouble. Consumer spending rose .2%, less than in most months over the last year. Incomes fell by 0.1%. According to The Wall Street Journal,  it was the first decline in incomes since July 2009.

Personal income decreased $16.8 billion, or 0.1 percent, and disposable personal income (DPI)
decreased $20.3 billion, or 0.2 percent, in September, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $17.3 billion, or 0.2 percent.  In August,
personal income increased $54.4 billion, or 0.4 percent, DPI increased $47.9 billion, or 0.4 percent,
and PCE increased $52.5 billion, or 0.5 percent, based on revised estimates.

Real disposable income decreased 0.3 percent in September, in contrast to an increase of 0.2
percent in August.  Real PCE increased 0.1 percent, compared with an increase of 0.3 percent.

                                        2010
                                        May             June            July            Aug.            Sept.
                                                       (Percent change from preceding month)
Personal income, current dollars        0.4             0.0             0.2             0.4            -0.1
Disposable personal income:
 Current dollars                        0.4             0.0             0.0             0.4            -0.2
 Chained (2005) dollars                 0.4             0.2            -0.2             0.2            -0.3
Personal consumption expenditures:
 Current dollars                        0.2             0.0             0.5             0.5             0.2
 Chained (2005) dollars                 0.3             0.1             0.2             0.3             0.1

The September change in personal income reflects provisions of unemployment compensation legislation,
which had boosted emergency government unemployment benefits (within current transfer receipts) in August.
Excluding emergency government unemployment insurance benefits, which are discussed more fully below,
personal income increased $8.7 billion, or 0.1 percent, in September, following an increase of $33.9 billion,
or 0.3 percent, in August.

Coal in the stocking this year.

Douglas A. McIntyre