September 2010 Personal Income and Outlays, Retail Sales and Consumer Debt

Click image for larger view

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.
 

Click image for larger view

Click image for larger view

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).
 

Click image for larger view

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.