The most recent data release from the Bureau of Economic Analysis (BEA) showed that Personal income climbed 0.3% in March after increasing by the same margin in prior month. Gains in personal income are largely driven by increases in wages and salaries. This is in line with the report by the National Compensation Survey that wages and salaries for civilian workers in the first quarter 2018 registered the largest growth since 2007. Real disposable income, income remaining after adjusted for taxes and inflation, was up 0. 2%. This is the seventh consecutive increase since September 2017.
Personal consumption expenditures (PCE) edged up 0.4% in March after being unchanged in February. In the first quarter 2018, consumer spending grew at an annualized rate of 1.1%, slowing down from a 4.0% surge in the last quarter 2017. Real spending, adjusted to remove inflation, increased 0.4% after a dip of 0.2% in February.
In March, around 3.1% of disposable income went to personal savings, slipping from a downwardly revised savings rate of 3.3% in February. As shown in the graph below, the savings rate was on the downward path since 2016 when rising consumption contributed to fueling economic growth.