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Real Disposable Income Rises in December

Personal income increased 0.3 percent in December, the same increase as in November.Personal Income Feb 1 Wages and salaries, the largest component of personal income, increased 0.2 percent in December after increasing 0.5 percent in November.

Current-dollar disposable personal income (DPI), after-tax income, increased 0.3 percent in December after increasing 0.2 percent in November.

Real DPI, income adjusted for taxes and inflation, increased 0.4 percent in December after increasing 0.2 percent in November.

Real consumer spending (PCE), spending adjusted for price changes, increased 0.1 percent in December after increasing 0.4 percent in November. Spending on durable goods decreased 0.7 percent in December after increasing 1.8 percent in November.

PCE prices decreased 0.1 percent in December after increasing 0.1 percent in November. Excluding food and energy, PCE prices remained flat in December after increasing 0.2 percent in November.

Personal saving rate
Personal saving as a percent of DPI was 5.5 percent in December and 5.3 percent in November.

DPI Feb 1

For more information, read the full report.

GDP Increases in Fourth Quarter

Real gross domestic product (GDP) increased 0.7 percent in the fourth quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.

Real GDP Jan 29

GDP highlights

The fourth-quarter increase in real GDP mainly reflected an increase in consumer spending. Spending on services increased, notably on health care. Spending on durable goods also increased— notably on recreational goods and vehicles—as did spending on nondurable goods.

Residential investment and federal government spending also contributed to real GDP growth.

Partly offsetting these contributions, inventory investment, exports, and business investment each declined. In addition, imports, a subtraction in the calculation of GDP, increased.

Prices

Prices of goods and services purchased by U.S. residents increased 0.2 percent in the fourth quarter after increasing 1.3 percent in the third quarter. Excluding energy and food, prices rose 0.9 percent in the fourth quarter and 1.3 percent in the third quarter.

Personal income and personal saving

Real disposable personal income—personal income adjusted for taxes and inflation—rose 3.2 percent in the fourth quarter after rising 3.8 percent in the third quarter. Personal saving as a percentage of disposable personal income was 5.4 percent in the fourth quarter, compared with 5.2 percent in the third quarter.

Annual GDP growthannual growth jan 29

For the year 2015, real GDP increased 2.4 percent, the same as in 2014.

  • Consumer spending was the largest contributor to growth. Spending increased on services, notably healthcare, as well as durable and nondurable goods.
  • Business investment, residential investment inventory investment, state and local government spending, and exports also increased.
  • Imports, a subtraction in the calculation of GDP, increased, partly offsetting the contributions to growth.

Prices of goods and services purchased by U.S residents increased 0.3 percent in 2015, compared with a 1.5 percent increase in 2014. Excluding food and energy, prices rose 1.0 percent in 2015 after rising 1.6 percent in 2014.

For more information, read the full release.

Industry in Focus: How Health Care and Social Assistance Fared in Third Quarter

Health care is an industry that many of us experience firsthand, whether receiving treatment for an illness or injury or simply getting an annual check-up. In the third quarter of 2015, health care and social assistance was the second-leading contributor to the 2 percent increase in the U.S. economy’s growth, providing 0.38 percentage point to real GDP.

Of particular interest: health care and social assistance accelerated from July through September, after decelerating for three consecutive quarters. (We describe an industry as accelerating when its growth in the current quarter is faster than its growth in the previous quarter. Conversely, we describe an industry as decelerating when its growth in the current quarter is slower than its growth in the previous quarter.)

We learn even more about what is happening inside the health care sector when we dig down into the underlying detail tables that we introduced last quarter.

Health care and social assistance consists of four underlying industries—ambulatory health care services, hospitals, nursing and residential care facilities, and social assistance. A glance at the contributions of the underlying industries reveals that three of the four industries had actually been declining for two quarters.

However, growth in ambulatory health care services (which includes outpatient-services providers such as physicians, dentists, or optometrists) had hidden those declines. In the third quarter those three industries stopped declining and started growing again, which explains why health care and social assistance as a whole both grew and accelerated during the period.

Combining all of these observations from just a handful of tables allows one to paint a rich picture of what’s actually going on in the economy. What started as a relatively straightforward story—“health care grew in the third quarter”—becomes far more interesting when we begin to look at how that growth changed from previous quarters and how different parts of the industry fared.