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Bureau of Economic Analysis data showed that disposable personal income (DPI) decreased by $20.3 billion (-0.2 percent) in September -- the first drop since July 2009, while personal consumption expenditures (PCE) rose by $17.3 billion (+0.2 percent) -- the smallest gain in 3Q2010. Real (i.e., inflation-adjusted) DPI decreased 0.3 percent in September; real PCE increased 0.1 percent.
Much of the September drop in personal income resulted from a $25.5 billion (annualized) reduction in unemployment compensation transfer payments. Excluding emergency government unemployment insurance benefits, personal income increased 0.1 percent.
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Given the rise in PCE, it comes as no surprise that retail sales also jumped (+0.6 percent) in September. The largest percentage increase occurred in vehicle sales, but the “other” category exhibited the largest absolute change (+$1.183 billion). Furniture stores (+0.5 percent) were also beneficiaries of the gain in retail sales, as were hardware stores (+0.6 percent).
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Cheaper borrowing costs likely helped push total
consumer debt outstanding $2.1 billion (1.1 percent, annualized) higher in September -- the first monthly increase since January and the largest increase in two years. Revolving credit (e.g., credit cards) fell by $8.2 billion -- the twenty-fifth monthly decline, but non-revolving credit (e.g., college and auto loans) jumped by $10.4 billion.
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