Income and Spending Fell Hard in February

The Bureau of Economic Analysis reported this morning that Personal Income fell 7.1% last month after leaping 10% the month before. Analysts were not surprised and had estimated a slide of 7.1%. Personal Spending fell 1% which was a little more than the 0.8% slide that was anticipated. Inflation-adjusted Real Personal Spending fell 1.2% versus a forecast of a 1% drop.

The BEA also provided that inflation news with a report showing that its Personal Consumption Expenditures Index rose 0.2% last month and that was slightly less than expected. Year-over-year, headline PCE rose one-tenth to 1.6%. Without food and energy, core PCE rose by the expected 0.1% in February with the year-over-year pace falling from 1.5% to 1.4%. The BEA also reported that the Personal Savings Rate fell from 19.8% to 13.6% last month.

Treasury prices were already headed lower before today’s numbers and have lost a little more ground since. The Ten-Year is trading around 1.66% with the Long Bond at 2.38%. The Two-Year is still steady at around 14 basis points. Crude oil has rallied about a dollar-and-a-half to $60 while gold has slipping a bit to $1,725. Equity markets should open in the green. A little later today, the University of Michigan will release a report on its Index of Consumer Sentiment.