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Economy in Brief

U.S. Personal Income Gain Leads Personal Consumption Higher
by Tom Moeller  September 27, 2013

The consumer earned more money last month, and spent it. Personal income in August matched expectations and increased 0.4% (3.7% y/y) following a 0.2% July rise, revised from 0.1%. An improved 0.4% increase (3.5% y/y) in wage & salaries followed a 0.3% July decline. The 1.3% gain (10.8% y/y) in rental income and a 1.0% increase (10.8% y/y) in proprietors' earnings added to the strength. Transfer receipts rose 0.4% (4.4% y/y). Offsetting these gains was a 0.1% slip (+9.8% y/y) in dividend income and a 0.3% decline (+1.9% y/y) in interest earnings. Disposable personal income increased 0.5% (2.8% y/y) and inflation adjusted take-home pay rose 0.3% (1.6% y/y).

Personal consumption expenditures improved 0.3% (3.2% y/y) last month after a 0.2% rise in July, revised from 0.1%. The gain also matched expectations. Spending on durable goods jumped 0.5% (5.9% y/y) as motor vehicle purchases gained 1.1% (7.7% y/y). Home furnishings purchases rose 0.2% (4.4% y/y) with the strength in home buying; but spending on apparel fell 0.5% (+2.2% y/y). Gasoline purchases fell 1.1% (-3.2% y/y) and equaled the decline in real terms (-1.2% y/y). Spending on services gained 0.4% (3.0% y/y). Adjusted for price changes, personal consumption rose 0.2% (2.0% y/y).

The personal savings rate moved up to 4.6% but remained down slightly from 4.9% twelve months earlier. The total value of personal savings has fallen 3.7% during the last twelve months.

The PCE chain price index inched 0.1% higher (1.2% y/y) in August and matched the July rise. Durable goods prices again fell 0.3% (-1.9% y/y) while prices for nondurables rose 0.2% (0.4% y/y). Services prices increased 0.2% (1.9% y/y). Less food & energy, the chain price index rose 0.2% (1.2% 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.

Banking, Liquidity and Monetary Policy is from Fed Governor Jeremy C. Stein and it is available here.

Personal Income & Outlays (%) Aug Jul Jun Y/Y 2012 2011 2010
Personal Income 0.4 0.2 0.3 3.7 4.2 6.1 2.9
  Wages & Salaries 0.4 -0.3 0.4 3.5 4.3 4.1 2.0
Disposable Personal Income 0.5 0.3 0.3 2.8 3.9 4.8 2.8
Personal Consumption Expenditures 0.3 0.2 0.6 3.2 4.1 5.0 3.8
Personal Saving Rate 4.6 4.5 4.4 4.9
(Aug'12)
5.6 5.7 5.6
PCE Chain Price Index 0.1 0.1 0.4 1.2 1.8 2.4 1.7
  Less Food & Energy 0.2 0.1 0.2 1.2 1.7 1.4 1.3
Real Disposable Income 0.3 0.2 -0.1 1.6 1.7 2.4 1.1
Real Personal Consumption Expenditures 0.2 0.1 0.2 2.0 2.2 2.5 2.0
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