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Economy in Brief

U.S. Personal Spending Rise Moderates Despite Firmer Income Gain
by Tom Moeller  August 3, 2015

Personal consumption expenditures increased 0.2% during June following 0.7% and 0.3% gains during May and April, revised from 0.9% and 0.1%. The latest was the smallest rise since February and matched expectations in the Action Economics Forecast Survey. Figures dating back through 2012 were revised. Adjusted for price inflation, personal spending eased minimally (+2.9% y/y) after 0.4% and 0.2% gains during the prior two months. Real durable goods purchases declined 1.1% (+4.5% y/y) after a 1.3% rise. Nondurable goods purchases in constant dollars fell slightly (+2.5% y/y) after a 0.9% jump and real services spending improved 0.2% (2.8% y/y) following a 0.1% uptick.

Personal income improved 0.4% (4.1% y/y) for the third straight month. A 0.3% increase had been expected. Wages & salaries gained 0.2% (4.1% y/y) following a 0.4% rise. Rental income jumped 1.1% (8.6% y/y) following similar gains during the prior two months. Proprietors income improved 0.8% (1.9% y/y) after a 0.5% rise. Social security payments fell 0.3% (+4.0% y/y), the first decline in nearly a year, while Medicare receipts gained 0.3% (3.3% y/y) for the fifth straight month. Unemployment insurance receipts surged 1.8% (-11.1% y/y). Interest income jumped 1.3% (1.9% y/y), strong for the third straight month, and dividend receipts gained 0.3% (5.3% y/y).

Disposable income increased 0.5% (3.4% y/y) after 0.4% gains during the prior two months. In real terms, disposable income rose 0.2% (3.0% y/y) after a 0.1% uptick. The three-month rate of change improved to 2.7%, its best since early this year.

The personal savings rate rose to 4.8% from 4.6%, revised from 5.1%. The rate was down from a February high of 5.4%. Personal saving increased 3.2% during the last twelve months.

The chain price index gained 0.2% (0.3% y/y) following a 0.3% rise. Energy prices jumped 1.8% (-15.9% y/y) while food prices improved 0.3% (1.0% y/y). Durable goods prices eased 0.2% (-2.0% y/y) but nondurable goods prices rose 0.4% (-3.0% y/y). Services prices increased 0.2% (1.9% y/y). The price index excluding food & energy notched 0.1% higher (1.3% y/y) for the third straight month.

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The consensus expectation figures are in the AS1REPNA database.

Personal Income & Outlays (%) Jun May Apr Y/Y 2014 2013 2012
Personal Income 0.4 0.4 0.4 4.1 4.4 1.1 5.0
  Wages & Salaries 0.2 0.4 0.2 4.1 5.1 2.7 4.5
Disposable Personal Income 0.5 0.4 0.4 3.4 4.2 -0.1 5.1
Personal Consumption Expenditures 0.2 0.7 0.3 3.2 4.2 3.1 3.4
Personal Saving Rate 4.8 4.6 5.0 4.8
(June '14)
4.8 4.8 7.6
PCE Chain Price Index 0.2 0.3 0.0 0.3 1.4 1.4 1.9
  Less Food & Energy 0.1 0.1 0.1 1.3 1.5 1.5 1.9
Real Disposable Income 0.2 0.1 0.3 3.0 2.7 -1.4 3.1
Real Personal Consumption Expenditures -0.0 0.4 0.2 2.9 2.7 1.7 1.5
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