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Economy in Brief

U.S. Personal Income Improves Again -- And It's Saved
by Tom Moeller  July 31, 2012

Consumers are growing more cautious.Personal income increased 0.5% (3.5% y/y) last month following a revised 0.3% May rise. A 0.4% June gain was expected. Wages and salaries were firm and posted a 0.5% rise (3.5% y/y) after a little-revised 0.1% May uptick. A 0.9% increase (-0.7% y/y) in interest earnings and a 1.4% jump (9.5% y/y) in dividend income provided the real strength to the income rise. Disposable income rose a firmer 0.4% (3.2% y/y) while inflation-adjusted take-home pay increased 0.3% (1.7% y/y) after an upwardly revised 0.5% May rise.

Consumers took the opportunity afforded by the income gain to lift their savings by 12.1% m/m and increase the savings rate to 4.4%, the highest level in twelve months. 

Personal consumption expenditures slipped marginally in June for the second consecutive month. A 0.1% rise was expected. Adjusted for prices, spending fell 0.1% (2.0% y/y). In real terms, inflation-adjusted spending on durable goods was unchanged (8.2% y/y) while real outlays on nondurables fell 0.4% (+1.5% y/y). Real services spending was flat m/m (1.2% y/y).  

The PCE chain price index ticked up 0.1% (1.5% y/y) in June after a 0.2% May decline. Durable goods prices slipped 0.1% (-1.6% y/y) while nondurables costs dipped 0.1% as well (+1.3% y/y). Services prices rose 0.2% (2.1% y/y). Less food and energy, the PCE chain price index gained 0.2% (1.8% y/y), its strongest increase since March.

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(%) Jun May April Y/Y 2011 2010 2009
Personal Income 0.5 0.3 0.2 3.5 5.1 3.8 -4.8
  Wages & Salaries 0.5 0.1 -0.0 3.5 4.0 2.1 -4.3
  Disposable Personal Income 0.4 0.3 0.1 3.2 3.8 3.8 -2.7
Personal Consumption Expenditures -0.0 -0.1 0.2 3.6 5.0 3.8 -1.9
Personal Saving Rate 4.4 4.0 3.6 4.7
(Jun'11)
4.2 5.1 4.7
PCE Chain Price Index 0.1 -0.2 0.0 1.5 2.4 1.9 0.1
  Less Food & Energy 0.2 0.1 0.1 1.8 1.4 1.5 1.4
Real Disposable Income 0.3 0.5 0.1 1.7 1.3 1.8 -2.8
Real Personal Consumption
Expenditures
-0.1 0.1 0.2 2.0 2.5 1.8 -1.9
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