Where the Money Flows: Compensation, Cars, and Creature Comforts
The increase in personal income was primarily driven by higher compensation. The rise in PCE was split between increased spending on services ($59.3 billion) and goods ($44.5 billion). Notable contributors to the services increase included housing and utilities, while motor vehicles and parts, as well as food and beverages, led the growth in goods spending.
The Price Puzzle: Goods Down, Services Up
Regarding prices, the PCE price index’s 0.2% monthly increase was composed of a slight decrease in goods prices (less than 0.1%) and a 0.2% increase in services prices. Food prices rose 0.2%, while energy prices saw a minimal increase. The annual PCE price index increase of 2.5% reflected a marginal decrease in goods prices, countered by a 3.7% rise in services prices. Food and energy…
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