The Bureau of Economic Analysis's January 2024 Personal Income / Consumer Expenditure report show a massive increase of +$234B month-over-month in personal income (a seasonally adjusted annual rate, or SAAR), three times the recent trend. The majority of the increase came from government transfer payments due to a higher cost-of-living adjustment. (It’s so interesting/distressing to see the ongoing mismatch between fiscal and monetary policy.) As expected, personal consumption expenditures (PCE) increased at a more moderate rate of +$44B, only one-third of last month’s $137B increase. Spending on goods fell -$77B, more than the increase of +$23B. (We previously reported that January retail sales were very weak.) A concerning note is that spending on Services increased by a very large amount, +$121B, nearly twice the recent trend. However, pulling that increase apart shows that a lot of the increase was anomalous: +$22B in utility expense resulting from the month’s cold snap, +$18B to portfolio/wealth managers due to the strong stock market, +$15B came from imputed rent on owner-occupied housing, and $10B from year-end hospital procedures. All total, that’s $65B of the $121B. Based upon February’s mild temperatures, we expect to see more spending on fun and stuff, and less on anomalous.
