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Economy in Brief

U.S. Personal Income Growth Is Steady; Spending Improves
by Tom Moeller  August 30, 2012

Personal income grew an expected 0.3% in July (3.6% y/y), the same as in the prior two months. June's rise was revised down from 0.5%. Wages and salaries increased 0.2% (3.5% y/y) after a 0.4% June rise. Earnings on financial assets produced a 1.1% gain (8.3% y/y) in dividend income but that offset a 0.5% decline (-0.4% y/y) in interest earnings. Proprietors' income increased 0.5% (4.5% y/y). A 0.2% rise in taxes (5.9% y/y) left disposable income up 0.3% (3.4% y/y) for the third straight month. Inflation-adjusted take-home pay increased 0.3% (2.0% y/y) following a downwardly revised 0.2% June rise.

These moderate gains in income afforded individuals the opportunity to lift the personal savings rate to 4.2% last month and 4.3% in June. These figures are up from November's 3.2%, the highest since June of last year. 

Personal consumption expenditures rebounded by an expected 0.4% after a little-revised no change in June. Adjusted for prices, spending also rose 0.4% (2.0% y/y). Real spending on durable goods jumped 1.1% (8.0% y/y) while inflation-adjusted outlays on nondurables gained 0.5% (1.1% y/y). Real services spending rose 0.3% (1.3% y/y).  

The PCE chain price index was unchanged (1.5% y/y) in July after June's 0.1% uptick. Durable goods prices fell 0.3% (-1.8% y/y), the fifth decline in six months. Nondurables costs increased 0.2% (1.0% y/y), helped by the rise in gasoline prices, and services prices were unchanged (1.9% y/y). Less food and energy, the PCE chain price index also was unchanged (1.6% y/y).

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

The Federal Reserve's latest Beige Book covering regional economic conditions is available here.  

 

Personal Income & Outlays(%) Jul Jun May Y/Y 2011 2010 2009
Personal Income 0.3 0.3 0.3 3.6 5.1 3.8 -4.8
  Wages & Salaries 0.2 0.4 0.1 3.5 4.0 2.1 -4.3
Disposable Personal Income 0.3 0.3 0.3 3.4 3.8 3.8 -2.7
Personal Consumption Expenditures 0.4 0.0 -0.2 3.3 5.0 3.8 -1.9
Personal Saving Rate 4.2 4.3 4.0 4.2
(Jul'11)
4.2 5.1 4.7
PCE Chain Price Index 0.0 0.1 -0.2 1.3 2.4 1.9 0.1
  Less Food & Energy 0.0 0.2 0.1 1.6 1.4 1.5 1.4
Real Disposable Income 0.3 0.2 0.5 2.0 1.3 1.8 -2.8
Real Personal Consumption
Expenditures
0.4 -0.1 -0.0 2.0 2.5 1.8 -1.9
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