Recent Updates
- Lebanon: Public Debt (Nov-Prelim)
- Serbia: New Business Loans (Dec)
- Germany: GfK Consumer Climate Survey (Jan)
- France: Registered Unemployment and Vacancies (Dec), Monthly Household Survey (Jan)
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Economy in Brief
U.S. FHFA House Price Index Rose Further in November
The FHFA House Price Index increased 1.0% m/m in November...
U.S. Energy Prices Are Mixed
The price of regular gasoline rose to $2.39 per gallon (-4.5% y/y) in the week ended January 25...
U.K. Retail Survey Shows Extreme Weakness
The CBI U.K. retail volume survey shows dramatically weakened data for January and for the February outlook...
Texas Manufacturing Activity Weakens Further During January
The Dallas Fed reported that its Texas Manufacturing Outlook Survey General Business Activity Index fell to 7.0 during January...
Chicago Fed National Activity Index Improves During December
The Federal Reserve Bank of Chicago's National Activity Index increased to 0.52 during December...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Carol Stone August 28, 2009
Personal income in July was almost exactly equalto June's amount, $11,957.4 billion versus $11,953.6 billion. While transfer payments and dividends decreased, this report includes the first increase in wages and salaries since last October, surely a welcome development, albeit a small one. Consensus forecasts were close to the actual, as they called for a 0.1% rise in total income.Transfers continued to fall in the wake of the stimulus-generated bulge in May, but the July decline was just 0.2%. Notably, this included a small decrease in unemployment benefits. The drop in dividends was 2.6%, larger than in May and June, but much less than the 4.9% average cut each month of Q1.
The wage and salary increases were small, just 0.1%, but this was evenly spread across goods producers, service producers and government workers. Another cyclically tied item, nonfarm proprietors' income, gained for a second month, rising in July by 0.8% after 0.3% in June. Prior to that, this small-business-owners' income had fallen for 10 consecutive months.
Taxes turned back higher as well last month, increasing 0.8%, their first increase since August 2008. Obviously, the pattern of stimulus-oriented refunds is impacting the monthly changes. More generally, taxes have recently been running at 9% of personal income, compared with 12.6% back at the peak of the economy and the first few months of recession in early 2008.
The steadier behavior of pre-tax incomes means that, despite the higher taxes in July, disposable personal income basically held at its June amount after a slightly revised 1.1% decline in June. Adjusted for inflation, real disposable income eased just 0.1%; it had fallen 1.6% in June. The saving rate decreased again, from June's 4.5% to 4.2%; obviously lower than the recent peak of 6.0% in May, it remains far higher than last July's 2.6% and compares favorably with almost the entire stretch of this decade so far.
Consumer spending gained 0.2% in July after a 0.6% rise in June. Durable goods outlays were up 1.3%, as the initial weeks of the "cash-for-clunkers" program generated a surge of 22.3% in spending on new autos. [What will August's number show??]. Trucks benefited little from the program, but spending for them still went up 4.8%. Nondurable goods spending eased 0.3%, including a 2.2% drop in gasoline; recreation items, personal care products and household supplies also saw moderate decreases. Among services, total outlays increased 0.3%. This modest change masks some interesting moves individual items: spending on electricity was down 2% and has fallen in every month of 2009 so far. Transportation services were up 1.6%, but those related to personal motor vehicles increased just 0.3% while public transportation outlays gained 5.6%, with ground and air transport both participating. Finally, the comprehensive national accounts revisions have moved restaurants from nondurable goods to the service sector. Food services spending was up 0.4% in July, reversing June's 0.3% decline; the portion spent on "alcohol in purchased meals" gained 0.9%, however, its first increase in five months.
Pricing power remains basically nonexistent. The PCE chain price index was virtually flat last month, as energy prices decreased 0.4% after their surge in June. The ex-food-and-energy "core" was up a mere 0.1%, very close to its May and June amounts. Prices for services, long the most inflation-prone consumer items, increased just 0.1%, but this was largest one-month increase since last October.
The personal income & consumption figures are available in Haver's USECON and USNA databases.
Disposition of Personal Income (%) | July | June | May | Y/Y | 2008 | 2007 |
---|---|---|---|---|---|---|
Personal Income | 0.0 | -1.1 | 1.4 | -2.4 | 2.9 | 5.6 |
Disposable Personal Income | 0.0 | -1.1 | 1.7 | -0.3 | 3.9 | 4.9 |
Personal Consumption Expenditures | 0.2 | 0.6 | 0.1 | -1.6 | 3.1 | 5.4 |
Saving Rate | 4.2 | 4.5 | 6.0 | 2.6 (July '08) | 2.6 | 1.7 |
PCE Chain Price Index | 0.0 | 0.5 | 0.1 | -0.8 | 3.3 | 2.7 |
Less food & energy | 0.1 | 0.2 | 0.1 | 1.4 | 2.4 | 2.4 |