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Economy in Brief

U.S. Personal Income Growth Eased in May
by Tom Moeller June 30, 2005

May personal income rose just 0.2% following a downwardly revised 0.6% gain the prior month. Consensus expectations had been for a 0.3% increase.

Wages & salaries rose a slim 0.1% (7.0% y/y) following the 0.7% pop in April. Wages in service producing industries rose 0.1% (8.3% y/y) after the 0.9% April gain but factory sector wages rose 0.3% (5.4% y/y) following a downwardly revised 0.4% April increase.

Disposable personal income rose 0.2% (5.5% y/y) following three months of 0.4% and 0.5% gain. When adjusted for price inflation take home pay rose 0.1% (3.2% y/y) for the second consecutive month.

Personal consumption was unchanged in May following a 0.6% increase in April due to the 4.5% m/m drop in light vehicle sales. Consensus expectations had been for a 0.1% rise. Spending on durables fell 1.8% (+3.7% y/y) and nondurables spending dipped 0.4% (+6.9% y/y) as gasoline prices fell. Spending on services rose 0.6% (5.6% y/y).

The PCE chain price index was unchanged with lower gas prices but less food & energy the 0.2% m/m increase was double the prior month's slim increase.

Lessons Learned from the Recent Business Cycle from Philadelphia Federal Reserve Bank President Santomero is available here.

Disposition of Personal Income May April Y/Y 2004 2003 2002
Personal Income 0.2% 0.6% 6.7% 5.8% 3.2% 1.8%
Personal Consumption 0.0% 0.6% 5.7% 6.0% 5.2% 4.6%
Savings Rate 0.6% 0.5% 1.0% 1.3% 1.4% 2.0%
PCE Chain Price Index 0.0% 0.4% 2.2% 2.2% 1.9% 1.4%
  Less food & energy 0.2% 0.1% 1.6% 1.5% 1.3% 1.8%
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