Personal Income Up by 0.4% in February

Economic Indicators & News

• The Bureau of Economic Analysis released data today which show that personal income rose by 0.4% in February to match the size of gains in January, and personal consumption and expenditures edged up by 0.1%, reversing the 0.2% decline seen in January.  Notably, the PCE price index grew by 0.2% after declining by 0.4% in January, and the core PCE, which strips out volatile food and energy prices, grew by 0.1% after growing at the same rate in January.  The PCE price index represents a particularly important metric because of its use by the Federal Reserve as a key measure of inflation used to set monetary policy.  At current levels, the PCE price index is 0.3% above year ago levels, and the core PCE price index is 1.4% above year ago levels.  With the PCE price index solidifying but still not lagging behind the Fed’s 2% target, changes to the FOMC’s current plans to increase interest rates in June appear unlikely. [BEA]    
• The pending home sales index released today by the National Association of Realtors suggests that demand may be building, as the index climbed by 3.1% in February to reach 106.9.  It marks the highest reading of the index in nearly twenty months.  In particular, growth in the national index was driven by robust gains in the south and west, where the regional indices grew by 11.6% and 6.6%, respectively. A greater fraction of homebuyers are also first-time buyers according to the NAR report, potentially suggesting some shift in a persistent trend away from home ownership among young Americans. [NAR]      
• The Texas Manufacturing Outlook Survey released today by the Dallas Federal Reserve reflects declines in factory activity as the headline general business activity index fell to -17.4 in March.  The production index declined to -5.2, suggesting that manufacturing has slowed substantially in March.  Across the board, indices were down; new orders, employment, finished goods prices, wages and benefits, and company outlook indices have all declined.  Weakness in manufacturing in Texas may point to slowing manufacturing activity across the country. [Dallas Fed]