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Economy in Brief

U.S. Personal Income Increases While Spending Declines
by Tom Moeller  June 29, 2012

Personal income gained an expected 0.2% (2.9% y/y) last month following an unrevised 0.2% April rise. Weaker employment growth, however, took its toll on income as wages and salaries were unchanged (3.2% y/y) after a downwardly revised 0.1% April uptick. A 0.8% rise (-0.4% y/y) in interest  earnings and a 0.6% gain (6.3% y/y) in dividend income provided most of the overall income rise. Disposable income increased 0.2% but after adjustment for lower prices, take-home pay increased an improved 0.3% (1.1% y/y). 

Personal consumption expenditures slipped marginally in May, also as expected, following a downwardly revised 0.1% April uptick. Adjusted for prices, spending rose just 0.1% in May and April. Much of last month's weakness in total real spending was due to a 2.5% decline (+7.6% y/y) in outlays on motor vehicles. Real spending on furniture & appliances rose 0.5% (6.2% y/y) and outlays on apparel increased 0.2% (-0.5% y/y). With easier prices, gasoline purchases increased 1.5% (1.1% y/y). 

The PCE chain price index fell 0.2% (+1.5% y/y) in May, led lower by a 6.6% drop (-4.1% y/y) in gasoline costs. Durable goods prices rose just 0.1% (-1.2% y/y) but apparel costs gained 0.5% (5.4% y/y). Services prices inched up 0.1% (2.0% y/y).

The personal saving rate improved to 3.9% as spending moderated. That was the highest level since January but down from last May's 4.7%.

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

Personal Income & Outlays(%) May April Mar Y/Y 2011 2010 2009
Personal Income 0.2 0.2 0.4 2.9 5.0 3.7 -4.3
  Wages & Salaries 0.0 0.1 0.2 3.2 4.1 2.2 -4.3
  Disposable Personal Income 0.2 0.2 0.4 2.6 3.7 3.6 -2.1
Personal Consumption Expenditures -0.0 0.1 0.1 3.5 4.7 3.8 -1.7
Personal Saving Rate 3.9 3.7 3.7 4.7
(May'11)
4.6 5.3 5.1
PCE Chain Price Index -0.2 0.0 0.2 1.5 2.5 1.8 0.2
  Less Food & Energy 0.1 0.1 0.2 1.8 1.4 1.4 1.6
Real Disposable Income 0.3 0.1 0.2 0.6 1.1 1.8 -2.3
Real Personal Consumption
Expenditures
0.1 0.1 -0.2 1.9 2.2 2.0 -1.9
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