Today the Bureau of Economic Analysis of the Department of Commerce released data on disposable personal income (DPI) and personal consumption expenditures (PCE) for the months of October and November. DPI is the income that remains after income taxes are deducted, and PCE is the amount of the remaining income that we spend. The difference between DPI and PCE, expressed as a percentage of the DPI, is known as the savings rate.

Disposable personal income increased $12.5 billion, or 0.2%, in November 1995 and $40.7 billion, or 0.8% in October. The November year-over-year growth in personal income was 4.7% -- the lowest since December 1993.

Personal consumption expenditures increased by $45.7 billion, or 0.9%, in November, after decreasing $13.9 billion, or 0.3% in October. November's rise was the largest increase in almost two years. The bulk of the increase was attributed to two causes: increased utility usage due to unusually cold weather and a surge in auto purchases.

The annualized savings rate was 4.5% in November and 5.2% in October. This compares with an average savings rate of 4.4% during the first three quarters of 1995.

This morning, Mitsubishi Bank/Schroder-Wertheim reported that sales at the stores they survey were up 1.9% from the preceding week. This follows declines of 1.0% and 2.6% in the two weeks before that.

This afternoon, the Johnson Redbook Survey reported that retail sales for the first three weeks of January were down 0.2% from the same period in December. This compares with a decline of 0.9% during the first two weeks of January. So, it appears that third week results were up, in agreement with the Mitsubishi findings. Year over year, Johnson Redbook reported a gain of 3.4% in retail sales.

Byline: Lafferty (MF Merlin)