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Economy in Brief

U.S. Personal Income Growth Slowed
by Tom Moeller August 3, 2004

Personal income grew an expected 0.2% last month. The slim gain followed growth of 0.6% in the prior two months.

Wages & salaries fell slightly (+4.8% y/y) following several months of strong gain. The decline reflected weakness across industries.

Personal disposable income grew 0.2% (6.2% y/y), down sharply from the gains of the prior several months. After accounting for a 2.5% y/y rise in prices, real disposable income rose 3.5%.

Consumer spending fell 0.7%, dragged lower by a 13.4% m/m skid in unit sales of light vehicles. No change in PCE had been expected. Non-durable goods spending also slipped by 0.3% (+8.4% y/y). Services rose 0.2% (4.9% y/y).

The PCE chain price index rose 0.2%. Less food & energy prices rose the same 0.1% (1.5% y/y) as the downwardly revised May.

The savings rate fell to 2.0% and prior figures were revised down.

"The Productivity and Jobs Connection: The Long and the Short Run of It" from the Federal Reserve Bank of San Francisco can be found here.

Disposition of Personal Income June May Y/Y 2003 2002 2001
Personal Income 0.2% 0.6% 5.4% 3.2% 1.8% 3.5%
Personal Consumption -0.7% 1.0% 5.3% 5.2% 4.6% 4.7%
Savings Rate 2.0% 1.2% 1.2% 1.4% 2.0% 1.8%
PCE Chain Price Index 0.2% 0.4% 2.5% 1.9% 1.4% 2.1%
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