According to a new report by the Wells Fargo Economics Group, personal income was strong in March, jumping .5 percent. February's growth received an upward revision to .4 percent. Personal consumption expenditures surpassed all expectations, posting a .9 percent increase.
The group noted that disposable personal income rose at the same rate as personal income, while real disposable personal income rose .3 percent in each month of the first quarter. Increases in personal income in March were largely due to improvements in wages and salaries.
Private wages and salaries grew by $42.3 billion in March, compared to only $17.4 billion in February. Wages and salaries grew by 4.3 percent over the past three months, and experienced a year-over-year increase of 3.6 percent, suggesting positive trends in earnings could move buyers into a better financial position to purchase a home.
Personal consumption increased as well, with healthcare purchases stemming from the implementation of the Affordable Care Act (ACA) driving purchases upward in March and the first quarter, exceeding predictions.
"Personal consumption expenditures surged 0.9 percent in March, capping a very strong first quarter for the U.S. consumer," the group noted.
The group commented that their findings largely confirm findings from the recently released report on GDP, which came in at 3.0 percent on an annualized basis during the first quarter of the year. GDP also beat market expectations, which were set at a growth estimate of 2.0 percent.
"Going forward, our expectation is that expenditures in healthcare due to the rollout of the ACA will continue to be a major driver of personal consumption expenditures during the second quarter and will continue to have a lesser, but still positive, effect on PCE during the second half of the year," the Wells Fargo Group said.
The group noted a cautious sign, however. Higher consumption came at the cost of savings, which decreased over the first quarter. Personal savings was only $487.7 billion in March versus $529.4 billion annualized rate in February.