Recent Updates

  • Building Permits by State (Nov)
  • Italy: Production in Construction (Nov)
  • Finland: Tourism (Dec); Iceland: HICP (Dec)
  • Russia: Nonresident Holdings of Government Debt (Nov)
  • Netherlands: Labor Force (2017), International Trade (Nov), Labor Force Survey (Dec)
  • Japan: Industrial Production (Nov-Final), Foreign Exchange Trading Volume (Dec), Operating Rates (Nov)
  • China: Foreign Exchange Settlement and Sales, Bank Foreign
  • more updates...

Economy in Brief

U.S. Personal Income Increases But Spending Declines
by Tom Moeller  August 2, 2011

Personal income rose 0.1% last month following a revised 0.2% May increase, initially reported as 0.3%. A 0.2% June increase had been expected. The revision was part of the benchmark changes to the GDP accounts reflected in Friday's figures. The revision to personal income raised growth moderately for 2010 but lowered it sharply in 2009. Disposable income gained 0.1% following an unrevised 0.2% May gain. Adjusted for prices, however, growth was stronger due to lower gasoline costs. Constant dollar take-home pay rose 0.3%. The increase followed five consecutive months when real income was essentially unchanged. These latest changes pulled y/y growth in real income down to 1.1%, its worst since the period following the 2010 federal income tax cut.

Wages & salaries were roughly unchanged last month after a modest May 0.2% rise. The latest again reflected the negligible increase in payroll employment. A 0.3% decline (+13.1% y/y) in rental income was the third consecutive monthly drop, while proprietors' income slipped 0.1% (+6.9% y/y). Transfer payments rose 0.4%. The y/y increase eased to an upwardly revised 4.3% and contrasts with 13.8% growth in 2009 as the job market improved. Economic growth also raised June dividend income by 0.9% (9.9% y/y) following last year's 19.9% jump. Higher interest rates raised interest income by 0.5% (0.8% y/y) for the third consecutive month. That followed a 9.5% decline last year and a 19.8% drop in 2009. The personal savings rate rose to 5.4% with the divergent monthly changes in income & outlays.

Personal consumption expenditures fell 0.2% last month after a little-revised 0.1% May uptick. A 0.1% June uptick had been expected. Spending on durable goods fell 0.4% (+6.7% y/y) as auto sales fell for the third month in the last four. Lower gasoline prices dropped spending on nondurables by 0.6% (+9.1%). Services spending slipped marginally (+2.6% y/y). In constant dollars, real personal consumption expenditures slipped for the third consecutive month. On a three month basis spending fell 1.1% (AR).

The PCE chain price index fell 0.2% last month (+2.6% y/y) with lower gasoline prices. The core PCE price deflator inched up 0.1% and by 1.3% y/y. That's versus the record low year-to-year change of 0.7% reached this past December.

The personal income & consumption figures are available in Haver's USECON and USNA databases. The expectations figures are in the AS1REPNA database.

Personal Income & Outlays (%) Jun May Apr Y/Y 2010 2009 2008
Personal Income 0.1 0.2 0.4 5.0 3.7 -4.3 4.6
  Wages & Salaries -0.0 0.2 0.4 3.4 2.2 -4.3 2.0
Disposable Personal Income 0.1 0.2 0.4 3.7 3.6 -2.1 5.8
Personal Consumption Expenditures -0.2 0.1 0.2 4.4 3.8 -1.7 2.7
Saving Rate 5.4 5.0 4.9 5.8
(Jun'10)
5.3 5.1 5.4
PCE Chain Price Index -0.2 0.2 0.3 2.6 1.8 0.2 3.3
  Less Food & Energy 0.1 0.2 0.2 1.3 1.4 1.6 2.3
Real Disposable Income 0.3 -0.0 0.1 1.1 1.8 -2.3 2.4
Real Personal Consumption Expenditures -0.0 -0.1 -0.1 1.8 2.0 -1.9 -0.6
close
large image