Spending and income data weaker than expected for January. We revised down our Q1 GDP tracking estimate to 2.0% from 2.3% previously



POINTS:

Personal income and spending were both weaker than anticipated in January. Nominal consumer spending increased by 0.2% (month-over-month), below consensus expectations for a 0.4% gain. In real terms, consumer spending was flat—and in fact the level of consumer spending has held unchanged for three consecutive months. About 0.1 percentage point of the weakness in real consumption growth resulted from a decline in heating and energy services, which likely reflects warmer-than-normal weather in January (though warm weather may have helped boost spending on other items, so the net effect is unclear). Nominal personal income increased by 0.3%, slightly below consensus expectations for a 0.4% increase. Real disposable personal income—which is adjusted for taxes and inflation—declined by 0.1%, and is up just 0.6% from a year earlier.



Given weaker-than-expected consumer spending results, we revised down our tracking estimate of Q1 GDP growth to 2.0% (annualized) from 2.3% previously. Construction spending data and vehicle sales reported later today could also affect our tracking estimate