-US January personal income +0.6%; spending +0.7%
--US January wages and salaries +0.7%
--US January services spending +0.5%; durable goods spending +1.9%
--US January personal saving rate record low -1.0%; December -0.8%
--US January PCE price index +0.5%; core PCE prices +0.3%
--US January PCE price index +2.6% from year ago; core +1.8%
--US December personal income unrevised at +0.4%
--US December personal spending revised to +0.4% from +0.3%

By Andrew Williams, BridgeNews
Washington--March 1--U.S. personal income and spending grew in January at their fastest pace since September, while the savings rate plunged to a record low, the Commerce Department said Thursday. Incomes increased 0.6%, while spending climbed 0.7%, leaving the savings rate at a negative 1.0%. * * * Spending and income growth sped up from their December levels when spending was up a revised 0.4% and incomes grew 0.4%.
Economists surveyed by BridgeNews had predicted consumer income to rise 0.5% and spending to climb 0.6% in January.
Special factors, including cost-of-living adjustments for federal employees, boosted incomes in January, Commerce said. Excluding special factors, personal income would have risen 0.5%, the department said. Spending on services, anything from utility payments to vacations, was up 0.5%, after having been reported up a revised 0.8% in the prior month. Services make up about 60% of consumer expenditures.
Spending on durable goods like appliances and furniture rose 1.9%, rebounding somewhat from a revised 1.0% drop in December.
Durable goods are those with a lifespan of over three years, such as cars and electrical appliances, meaning they are the most sensitive to changes in interest rates.
Meanwhile spending on non-durable goods such as food, clothing and gasoline, was up 0.6% in January, following December's 0.1% gain.
On the income side, wages and salaries, which comprise over half of personal income, posted a 0.7% increase, after a rising 0.2% in December.
However, disposable income--personal income minus tax and some non-tax payments--rose 0.5%, accelerating from December's 0.4% increase, Commerce said.

INFLATION
The implicit price deflator for personal consumption expenditures, the Fed's preferred gauge of consumer inflation, rose 0.5%, following the 0.2% gain of December. Excluding volatile food and energy prices, the deflator rose 0.3% following a 0.2% advance the prior month. Compared with January 2000, the PCE price index was up 2.6% from year ago, while the core rate was 1.8% higher than a year earlier.

WHAT WAS EXPECTED:
Estimates of economists surveyed by BridgeNews ranged from up 0.2% to up 0.8% for income, and from up 0.2% to up 1.0% for spending. End