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Economy in Brief

U.S. Personal Income Up 0.6% As Expected
by Tom Moeller August 1, 2006

Personal income rose an expected 0.6% during June following an unrevised 0.4% increase in May. Earlier data reflected benchmark revision.

Wage & salary disbursements jumped 0.6% (6.9% y/y) in June following an unrevised no change the prior month. Strength was led by a 0.7% (7.9% y/y increase in private service-producing industry wages. Factory sector wages rose 0.3% (5.1% y/y) after an upwardly revised no change during May while earlier figures generally were revised up.

Higher interest rates boosted interest income by 1.7% (10.1% y/y) and dividend income jumped 1.0% (11.2% y/y).

Disposable personal income increased 0.6% (5.3% y/y) after a 0.4% rise in May. Personal taxes rose 1.0% (15.4% y/y).

Adjusted for price inflation, disposable personal income rose 0.4% (1.7% y/y) after an unrevised slight decline in May. Real disposable income per capita rose 0.3% (0.8% y/y).

Personal consumption again matched Consensus expectations for a 0.4% rise after an upwardly revised 0.6% May rise. Adjusted for price inflation spending rose 0.2% (2.6% y/y) for the third straight month.

The PCE chain price index rose an expected 0.2%. Less food & energy prices rose 0.2% (2.4% y/y). The expected increase was the fifth in the last six months.

The personal savings rate was again negative. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available here.

The Anxious Index, a measure of the probability of a recession in the U.S. economy, from the Federal Reserve Bank of Philadelphia is available here.

Disposition of Personal Income June May Y/Y 2005 2004 2003
Personal Income 0.6% 0.4% 6.5% 5.2% 6.2% 3.2%
Personal Consumption 0.4% 0.6% 6.2% 6.5% 6.6% 4.8%
Savings Rate -1.5% -1.6% -0.5% (June '05) -0.4% 2.0% 2.1%
PCE Chain Price Index 0.2% 0.4% 3.5% 2.9% 2.6% 2.0%
  Less food & energy 0.2% 0.2% 2.4% 2.1% 2.0% 1.4%
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