More on Personal Consumption

In response to my post Something Sustainable reader Tom Lindmark commented:

As I understand the numbers, real PCE declined 0.1% and disposable income was up only 0.1% if you net out the effects of the reduction in withholding taxes and the expiration of Making Work Pay.

From a quick look it appears taxes actually rose $55 billion in the period in nominal terms (not sure real terms), but Tom is correct that real PCE declined in January, but predominantly due to a decline in real energy consumption (though nominal consumption remains high). This can be seen in the below chart that compares components of real PCE over 3 and 12-months. Notice that real consumption has declined in all areas, with the exception of services and energy.



Source: BEA