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Economy in Brief

Steady U.S. Personal Income Increase Fosters Higher Savings
by Tom Moeller  August 28, 2015

Personal income improved 0.4% during July (4.3% y/y) for the fourth straight month. These remain the quickest increases since November and the latest figure matched expectations in the Action Economics Forecast Survey. Wages & salaries increased 0.5% (4.2% y/y), also the firmest rise since November. Rental income firmed 0.7% (8.6% y/y) following even stronger gains during the prior three months. Proprietors income improved 0.8% (2.4% y/y) after a 0.6% rise. Transfer payments rose 0.5% (5.1% y/y) as Medicaid payments jumped 1.5% (9.0% y/y). Unemployment insurance receipts fell 0.3% (-2.9% y/y). Interest income improved 0.1% (2.9% y/y) but dividend receipts eased slightly (+4.9% y/y).

Disposable personal income increased 0.5% (3.6% y/y) after three months of 0.4% improvement. Adjusted for price changes, take-home pay rose 0.4% (3.3% y/y), the strongest rise in six months.

Personal consumption expenditures improved 0.3%, the same as in June which was revised from 0.2%. The increase missed expectations for a 0.4% rise in the Action Economics Forecast Survey. Adjusted for price inflation, spending rose 0.2% overall (3.2% y/y). Real durable goods purchases gained 1.3% (6.2% y/y) and reflected a 2.6% increase (5.7% y/y) in motor vehicle purchases. Durable household equipment spending gained 1.0% (6.5% y/y) but clothing & footwear purchases rose just 0.2% (3.9% y/y). Real gasoline purchases eased 0.5% (+3.5% y/y), down for the third month in the last four. Constant dollar services purchases notched 0.1% higher (2.8% y/y), the weakest rise in the last four months.

The personal savings rate rose to 4.9% from 4.7%. The rate nevertheless was below a February high of 5.4%. Personal saving increased 3.8% during the last twelve months.

The chain price index nudged 0.1% higher (0.3% y/y), the weakest rise in three months. Energy prices gained 0.1% (-15.7% y/y), after two months of strong increase, while food prices improved 0.2% (0.9% y/y), about the same as during June. Durable goods prices eased 0.2% (-2.1% y/y) but nondurable goods prices edged 0.1% higher (-3.0% y/y). Services prices improved 0.1% (1.8% y/y) after four straight months of 0.2% increase. The price index excluding food & energy notched 0.1% higher (1.2% y/y) for the fourth straight month.

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figure is in the AS1REPNA database.

Personal Income & Outlays (%) Jul Jun May Y/Y 2014 2013 2012
Personal Income 0.4 0.4 0.4 4.3 4.4 1.1 5.0
  Wages & Salaries 0.5 0.2 0.4 4.2 5.1 2.7 4.5
Disposable Personal Income 0.5 0.4 0.4 3.6 4.2 -0.1 5.1
Personal Consumption Expenditures 0.3 0.3 0.8 3.5 4.2 3.1 3.4
Personal Saving Rate 4.9 4.7 4.6 4.8
(Jul '14)
4.8 4.8 7.6
PCE Chain Price Index 0.1 0.2 0.3 0.3 1.4 1.4 1.9
  Less Food & Energy 0.1 0.1 0.1 1.2 1.5 1.5 1.9
Real Disposable Income 0.4 0.2 0.1 3.3 2.7 -1.4 3.1
Real Personal Consumption Expenditures 0.2 0.0 0.5 3.2 2.7 1.7 1.5
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