MetroIntelligence Economic Update by P. DUFFY
Inflation tracker PCE Price Index rose 0.4 percent in December and 5.8 percent year-on-year
The Fed-preferred PCE Price Index rose 0.4% in December 2021, down from a rise of 0.6% in both November and October.
The index was up 5.8% year-on-year, the highest pace since 1981. The ‘core’ index minus food and energy was up 0.5% in December, matching November’s total and up from October, suggesting that higher inflation is continuing to spread to other sectors of the economy. The ‘core’ index was up 4.9% year-on-year, the highest pace since 1982.
December personal spending fell 0.6 percent even as disposable income rose 0.2 percent
Personal income increased 0.3 percent in December, disposable personal income (DPI) increased 0.2 percent and personal consumption expenditures (PCE) decreased 0.6 percent. This decline led to a rise in the personal savings rate to 7.9 percent, the highest since September 2021.
4Q21 compensation costs rise 4.0 percent year-on-year, steepest rise in 20 years
Overall compensation costs for civilian workers increased 4.0% for the 12-month period ending in December 2021. Although this was the steepest rise since 2001, even these higher wages are not keeping up with inflation. Wages and salaries increased 4.5% for the 12-month period ending in December 2021. Benefit costs increased 2.8% over the year.