by Calculated Risk on 3/30/2015 08:30:00 AM

The BEA released the Personal Income and Outlays report for February:

Personal income increased $58.6 billion, or 0.4 percent ... in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE)increased $11.8 billion, or 0.1 percent.
...
Real PCE -- PCE adjusted to remove price changes -- decreased 0.1 percent in February, in contrast to an increase of 0.2 percent in January. ... The price index for PCE increased 0.2 percent in February, in contrast to a decrease of 0.4 percent in January. The PCE price index, excluding food and energy, increased 0.1 percent in February, the same increase as in January.

The February price index for PCE increased 0.3 percent from February a year ago. The February PCE price index, excluding food and energy, increased 1.4 percent from February a year ago.

The following graph shows real Personal Consumption Expenditures (PCE) through February 2015 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income was higher than expected,   The increase in PCE was below the 0.2% increase consensus.

On inflation: The PCE price index increased 0.3 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.4 percent year-over-year in February.

Using the two-month method to estimate Q1 PCE growth, PCE was increasing at a 2.0% annual rate in Q1 2015 (using the mid-month method, PCE was increasing 0.8%). This is a slowdown in PCE.