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Economy in Brief
German PPI Accelerates
The German year-on-year PPI has generally been decelerating since early 2017...
U.S. Leading Economic Indicators Signal Continued Expansion
The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% during March...
Philadelphia Fed Factory Conditions Improve; Prices Jump
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rose to 23.2 during April...
U.S. Initial Claims for Unemployment Insurance Are Little Changed
Initial unemployment insurance claims slipped to 232,000 (-6.1% y/y) during the week ended April 14...
U.K. Retail Sales Fall
U.K. GDP is expected to cool its jets when the first quarter GDP number is released...
by Tom Moeller October 1, 2009
Personal
income in August continued to increase at its modest July
rate. The 0.2% rise followed a 0.2% gain which was revised
from 0.1%. Consensus forecasts were for a 0.1% uptick. These weak
increases wholly reflect the current recession. Year-to-year income
growth fell 2.6% during the last twelve months after a 2.9% increase
last year.
The dismal job market accounts for this year's negative income growth. Wages & salaries rose modestly m/m during July and August. However, these latest gains were not enough to lift wages yr-to-yr which fell 5.2% after a 2.1% 2008 increase. Wages in the factory sector fell 11.6% y/y while service sector wages fell 5.4%. To a limited extent these declines were offset by a 3.6% increase in government sector earnings.
Unemployment insurance payments picked up just some of the slack in the job market and rose 4.4% during August. That lifted payments to $136.9B versus $60.4B during August of last year. Interest income continued to show the effects of lower rates and fell 6.9% y/y while dividend income fell by one-quarter as corporate profits dried up.
Disposable personal
income increased just 0.1% following a slight decline during
July. Adjusted for inflation, real disposable income slipped for the
third straight month, although only by 0.2% during August and by 0.1%
in July. Real disposable income growth of 1.3% y/y was lifted by tax
cuts earlier this year. The saving rate fell again with the weakness in
income growth. The decline to 3.0% contrasted with a May peak of 5.9%.
Nevertheless, the rate remained up slightly from last year and double
the 2007 level.
Personal spending showed the full
effect of the "cash-for-clunkers" program for new motor vehicle
purchases. It lifted durables spending by 5.3% (-1.3% y/y) with a 13.3%
gain (6.6% y/y) for autos. Spending on nondurables rose just 2.3%
(-5.3% y/y) as outlays on apparel continued down by 3.8% versus last
year. Spending on furniture continued quite weak and fell 7.7% versus
last year.
Outlays on services increased 0.4% (1.7% y/y) as spending on
health care continued quite strong and posted a 5.2% gain versus last
year. Spending in restaurants and on recreation remained negative.
Prices increased 0.3% during August reflecting an 8.4% rise (-30.5% y/y) in gasoline costs and another rise is in store for September. Nevertheless, the PCE chain price index still was down by 0.5% versus last year. Less food-and-energy, "core" prices were again quite tame and posted their fourth consecutive 0.1% increase. Goods prices rose 0.7% (-3.6% y/y while prices for services increased just 1.0% y/y.
The personal income & consumption figures are available in Haver's USECON and USNA databases.
Yesterday's speech titled Central Bank Exit Policies by Vice Chairman Donald L. Kohn can be found here.
Disposition of Personal Income (%) | August | July | June | Y/Y | 2008 | 2007 |
---|---|---|---|---|---|---|
Personal Income | 0.2 | 0.2 | -1.1 | -2.6 | 2.9 | 5.6 |
Disposable Personal Income | 0.1 | -0.0 | -1.1 | 0.8 | 3.9 | 4.9 |
Personal Consumption Expenditures | 1.3 | 0.3 | 0.7 | -0.3 | 3.1 | 5.4 |
Saving Rate | 3.0 | 4.0 | 4.2 | 1.7 (Aug. '08) | 2.6 | 1.7 |
PCE Chain Price Index | 0.3 | 0.0 | 0.5 | -0.5 | 3.3 | 2.7 |
Less food & energy | 0.1 | 0.1 | 0.1 | 1.3 | 2.4 | 2.4 |