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Economy in Brief

U.S. Personal Income Again Up 0.6%, Core Price Inflation Eased
by Tom Moeller August 31, 2006

Personal income increased 0.6% last month, the same as during June which was unrevised. The gain slightly outpaced Consensus expectations for a 0.5% rise.

Wage & salary disbursements again were strong and rose 0.6% (7.9% y/y) for the second consecutive month. Wages in the private service-producing industries paced the increase with a 0.8% (8.6% y/y) while factory sector wages rose a lesser 0.3% (7.5% y/y) but the June increase was revised up to 0.5%.

Interest income fell 0.1% (9.6% y/y) after three months of greater than 1.0% increase and dividend income jumped another 1.0% (11.3% y/y).

Disposable personal income jumped 0.7% (6.0% y/y), up from the 0.5% average of this year's first six months. Personal taxes fell 0.3% (+14.9% y/y).

Adjusted for price inflation, disposable personal income rose 0.3% (2.5% y/y). Real disposable income per capita rose 0.3% (1.6% y/y), the same as the prior month

Personal consumption jumped 0.8%, double the prior month's unrevised increase and matched Consensus expectations. Adjusted for price inflation spending posted the largest increase of the year with a 0.5% gain (2.4% y/y) led by a 1.6% (-1.7% y/y) rise in real durables spending.

The PCE chain price index rose a less than expected 0.3% and the prior month's gain was revised down. Less food & energy prices rose 0.1% (2.4% y/y), the smallest m/m increase this year. Expectations had been for a 0.2% rise.

The personal savings rate was again negative, but prior month's figures were revised less 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.

A Primer on Inflation (with Comments on Real Estate in the Metroplex), yesterday' speech by Dallas Federal Reserve Bank President Fisher can be found here.

Disposition of Personal Income July June Y/Y 2005 2004 2003
Personal Income 0.6% 0.6% 7.1% 5.2% 6.2% 3.2%
Personal Consumption 0.8% 0.4% 5.9% 6.5% 6.6% 4.8%
Savings Rate -0.9% -0.7% -0.9% (July '05) -0.4% 2.0% 2.1%
PCE Chain Price Index 0.3% 0.1% 3.4% 2.9% 2.6% 2.0%
  Less food & energy 0.1% 0.2% 2.4% 2.1% 2.0% 1.4%
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