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Economy in Brief

U.S. Personal Income and Spending Moderate; Wage Income Falls
by Tom Moeller  August 30, 2013

Personal income in July matched expectations and ticked 0.1% higher (3.3% y/y) following an unrevised 0.3% June rise. May's increase was, however, reduced to 0.3% from 0.4%. Holding back income's increase was a 0.3% decline (+3.4% y/y) in wage & salaries, the first drop in six months. Offsetting some of this drop was a 1.3% gain (10.0% y/y) in rental income and a 0.6% increase (8.8% y/y) in proprietors' earnings. Dividend income jumped 2.2% (11.1% y/y) but interest earnings fell 0.3% (+1.3% y/y). Transfer receipts gained 0.2% (3.4% y/y). Disposable personal income gained 0.2% (2.2% y/y). Adjusted for price changes, disposable income ticked 0.1% higher (0.8% y/y).

Personal consumption expenditures notched up 0.1% (3.1% y/y) last month after a 0.6% gain in June, revised from 0.5%. The gain fell short of expectations for a 0.3% rise. A 0.2% decline (+5.7% y/y) in spending on durable goods reflected a 0.4% drop (+7.8% y/y) in motor vehicle purchases. Home furnishings purchases also fell 0.6% (+3.4% y/y) but spending on apparel gained 0.6% (2.5% y/y). Spending on gasoline rose 1.8% (6.7% y/y) but the gain was just 0.8% (1.7% y/y) in real terms. Spending on services was roughly unchanged (2.5% y/y). Adjusted for price changes, personal consumption was unchanged (1.7% y/y).

The personal savings rate held steady at 4.4%, down from 5.1% in July of last year. The total value of personal savings has fallen 13.1% during the last twelve months.

The PCE chain price index bumped 0.1% higher (1.4% y/y) in July after a 0.4% rise. Durable goods prices fell 0.3% (-1.8% y/y) but nondurable goods prices rose 0.3% (1.3% y/y) after June's 1.1% jump. Services prices rose 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 (%) Jul Jun May Y/Y 2012 2011 2010
Personal Income 0.1 0.3 0.3 3.3 4.2 6.1 2.9
  Wages & Salaries -0.3 0.4 0.2 3.4 4.3 4.1 2.0
Disposable Personal Income 0.2 0.2 0.3 2.2 3.9 4.8 2.8
Personal Consumption Expenditures 0.1 0.6 0.2 3.1 4.1 5.0 3.8
Personal Saving Rate 4.4 4.4 4.6 5.1
(Jul'12)
5.6 5.7 5.6
PCE Chain Price Index 0.1 0.4 0.1 1.4 1.8 2.4 1.7
  Less Food & Energy 0.1 0.2 0.1 1.2 1.7 1.4 1.3
Real Disposable Income 0.1 -0.2 0.2 0.8 1.7 2.4 1.1
Real Personal Consumption Expenditures 0.0 0.2 0.1 1.7 2.2 2.5 2.0
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