by Calculated Risk on 12/23/2020 08:51:00 AM

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

Personal income decreased $221.8 billion (1.1 percent) in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $218.0 billion (1.2 percent) and personal consumption expenditures (PCE) decreased $63.3 billion (0.4 percent).

Real DPI decreased 1.3 percent in November and Real PCE decreased 0.4 percent. The PCE price index had no change. Excluding food and energy, the PCE price index had no change .

The decrease in personal income was below expectations,  and the decrease in PCE was also below expectations

The November PCE price index increased 1.1 percent year-over-year and the November PCE price index, excluding food and energy, increased 1.4 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) since January 2019 through November 2020 (2012 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.

Using the two-month method to estimate Q4 PCE growth, PCE was increasing at a 6.8% annual rate in Q4 2020. (using the mid-month method, PCE was  increasing at 4.0%). However, it appears the economy contracted in December - so PCE growth could be lower than 4%.