Personal income rose 0.3 percent in January, compared with market expectations for an increase of 0.5 percent, according to the ""Labor Department"":http://www.dol.gov/.[IMAGE]
The agency said Thursday that income grew 3.6 percent in the last year.
Consumer spending grew 0.2 percent, compared with market expectations for an increase of 0.4 percent. The saving rate fell 0.1 points to 4.6 percent and averaged 4.7 percent in 2011.
That both personal and disposable income rose modestly in January despite a large gain in the labor market suggests employers are taking advantage of the supply-demand dynamics of the labor market which explains slow[COLUMN_BREAK]
consumer spending. Real consumer spending (adjusted for inflation) was unchanged in January for the third straight month, indicating that there is little spending momentum at the beginning of the new year.
Wages and salaries improved 0.4 percent, reflecting gains in new jobs and the increase in hourly earnings but in dollar terms grew $25.5 billion from January after increasing $29.9 billion in December.
Part of the increase in personal income was reportedly attributable to the reinstatement of the Social Security cost-of-living-adjustment for the first time in three years. Government social benefits for social security increased $20.3 billion in January, compared to an increase of $9.6 billion in December. Total personal income grew $34.9 billion.
The January change reflected 3.6-percent cost-of-living adjustments (COLAs) to social security benefits and to several other federal transfer payment programs. Together, these COLAs added $30.2 billion to the January increase in government social benefits to persons.
The Personal Consumption Expenditure (PCE) Price Index ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô often considered the Federal Reserve's favored measure of inflation - increased 0.2 percent and is now 2.4 percent above its year-ago level. Meanwhile, the Core PCE Index rose 0.2 percent and is up 1.9 percent in the last year. Core consumer inflation has been on a rising trend for the past 12 months.