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Economy in Brief

U.S. Personal Income Slows in June; Revisions Raise Saving Rate
by Carol Stone  August 2, 2013

Personal income growth moderated in June, with a 0.3% rise (3.1% y/y) after May's 0.4%, which was revised from 0.5% reported before. Consensus forecasts had looked for 0.4% in June. This report is part of the BEA's comprehensive revisions to the national accounts, and while the monthly changes in the total seem modest, they do encompass some major differences.

In particular, the treatment of defined benefit pension plans has shifted from a cash accounting basis for employers' contributions to an accrual basis that highlights the recipients' presumed future benefits. Interest income shows the biggest change, with the amount of that income in 2012 raised by 22.1%. In June interest income showed a 1.1% increase, the same as in May and April. The historical revision shifted the saving rate considerably higher; it was 4.6% in May instead of the 3.2% in the previous compilation. June's saving rate was then 4.4%. Other conceptual revisions affect proprietors' income and rental income, although the numerical amounts are much more modest. These are discussed in the March 2013 issue of the Survey of Current Business, found here.

Wages and salaries were up 0.5% in June (3.5% y/y) after May's 0.3%, the same as reported last time. The historical revisions to this item were marginal. Supplements to wages and salaries were also affected by the accounting change for pension plans, but the amounts vary over time and the trend shows little growth in recent months.

Personal consumption expenditures were up 0.5% in June (3.3% y/y), following just a 0.2% rise in May; that was revised from 0.3% initially. The result was in line with the Consensus forecast of 0.5%. Durable goods outlays picked up by 0.9% (6.4% y/y) from May's 0.6%, which was revised from 0.9%. The breakdown is not yet available from the BEA. Nondurable goods spending was up 1.3% (3.3% y/y) after 0.5% in May, revised upward from 0.3% initially. Outlays for services rose just 0.2% in June (2.9% y/y) and were flat in May, revised from a 0.1% rise.

The PCE chain price index increased 0.4% in June (1.3% y/y) after May's 0.1%. Energy goods and services prices rose 3.5% after a May increase of just 0.2%. Durable goods prices were virtually unchanged for a second month in June (-1.8% y/y) and nondurable goods prices rose 1.1% in June (+0.9% y/y).

Adjusted for price changes, real disposable income edged down 0.1% in June (+0.6% y/y) while real spending was up just 0.1% (2.0% y/y).

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

Personal Income & Outlays (%) June May Apr Y/Y 2012 2011 2010
Personal Income 0.3 0.4 0.0 3.1 4.2 6.1 2.9
  Wages & Salaries 0.5 0.3 0.1 3.5 4.3 4.1 2.0
Disposable Personal Income 0.3 0.3 -0.1 1.9 3.9 4.8 2.8
Personal Consumption Expenditures 0.5 0.2 -0.3 3.3 4.1 5.0 3.8
Personal Saving Rate 4.4 4.6 3.0 5.6
5.6 5.7 5.6
PCE Chain Price Index 0.4 0.1 -0.3 1.3 1.8 2.4 1.7
  Less Food & Energy 0.2 0.1 0.0 1.2 1.7 1.4 1.3
Real Disposable Income -0.1 0.2 0.2 0.6 1.7 2.4 1.1
Real Personal Consumption Expenditures 0.1 0.1 0.1 2.0 1.9 2.5 2.0
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