Personal Income, Consumption Rise in December; Consumers More Glum; Fannie Mae Says Delinquencies Down

U.S. personal income increased $2.3 billion in December. And personal consumption expenditures were up by $44.1 billion. Consumers are a little less optimistic now than at the end of last year. Fannie Mae reported that its single-family serious delinquency rate dropped to 2.38 percent in December, compared with 2.44 percent in November.

The Bureau of Economic Analysis reported on Friday that U.S. personal income increased $2.3 billion, or less than 0.1 percent, in December. Personal consumption expenditures – an economist’s way of saying people out buying things – was up by $44.1 billion, or 0.4 percent, so presumably consumers dipped into savings or tapped credit a bit more in December.

Real personal consumption expenditures, which is a figure adjusted to remove price changes, increased 0.2 percent in December, compared with an increase of 0.6 percent in November. The personal consumption expenditure (PCE) price index was up 0.2 percent in December, compared with an increase of less than 0.1 percent in November, and generally was in line with the minuscule inflation being registered by the CPI. The PCE price index excluding food and energy increased 0.1 percent in December, the same increase as in November.

Personal saving – disposable personal income minus outlays — was $495.2 billion in December, compared with $541 billion in November, according to the BEA. The personal saving rate, which is personal saving as a percentage of disposable personal income, was 3.9 percent in December, compared with 4.3 percent in November.

Consumers a Little More Glum 

The Reuter’s/University of Michigan consumer sentiment index for early January came in at 81.2 on Friday, an uptick from the mid-month reading of 80.4, but still a little short of the end of December reading of 82.5. The index is based on a survey of 500 U.S. households about their attitudes about their own finances, and the broader economy.

According to both the current and forward-looking components of the index, consumers are a little less optimistic now than at the end of last year. The current conditions component of the sentiment index was down, ending January at 96.8, compared with the end of December’s 98.6. The expectations component was likewise off a little, registering 71.2 at the end of January, compared with 72.1 at the end of December.

Fannie Mae Says Delinquencies Down

Fannie Mae reported on Friday that its single-family serious delinquency rate dropped to 2.38 percent in December, compared with 2.44 percent in November. The serious delinquency rate is down from 3.29 percent in December 2012, and it’s the lowest level for the GSE since November 2008. Last week, Freddie Mac also said that its single-family serious delinquency dropped both on a monthly and annual basis.

Wall Street continued on a downward trajectory on Friday, with the Dow Jones Industrial Average dropping 149.76 points, or 0.94 percent. The S&P 500 fell 0.65 percent and the Nasdaq was off 0.47 percent.