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Economy in Brief

U.S. Personal Income Gain Moderates; Spending Remains Firm
by Tom Moeller  September 28, 2015

Personal income increased 0.3% during August following a 0.5% July rise, revised from 0.4%. The latest gain was the weakest since March and disappointed expectations for a 0.4% rise in the Action Economics Forecast Survey. The source of the weakness was a 0.1% slip (+2.9% y/y) in proprietors' income which followed three straight months of strong increase. A firm gain in average hourly earnings lifted wages & salaries by 0.5% (4.1% y/y), off slightly from a 0.6% July rise. Both remain the strongest gains since November. Rental income firmed 0.5% (7.7% y/y) following a 0.4% rise and transfer payments rose 0.3% (4.5% y/y). Jobless insurance payments jumped 1.2% (2.4% y/y) but veterans benefits declined 0.4% (+13.3% y/y), down for the second straight month. Social security receipts rose 0.4% (4.5% y/y) for a second consecutive month while unemployment insurance receipts surged 1.2% (2.4% y/y). Dividend receipts jumped 0.5% (5.1% y/y) but interest income ticked just 0.1% higher (3.6% y/y).

Disposable personal income increased 0.4% after a 0.5% rise. The 3.6% y/y gain was the strongest since February. Adjusted for price inflation, take-home pay rose 3.2% y/y.

Personal consumption expenditures increased 0.4% (3.5% y/y), the same as in July which was revised from 0.3%. The increase beat expectations for a 0.3% rise. Adjusted for stable prices, the 0.4% gain in spending was the strongest in three months. Real durable goods purchases jumped 1.2% (5.5% y/y), powered by a 2.1% surge (2.4% y/y) in motor vehicle purchases. Real recreational goods & vehicles buying rose 0.7% (9.0% y/y) but clothing & footwear purchases eased 0.1% (+3.4% y/y). Real gasoline purchases jumped 2.1% (4.7% y/y), the strongest gain since October of last year. The gain in constant dollar services purchases was held to 0.3% (2.8% y/y) by a 0.5% decline (-1.0% y/y) in real recreation services.

The personal savings rate fell to 4.6% from 4.7%, revised from 4.9%. The rate was below a February high of 5.4%. Personal saving increased 3.2% during the last twelve months.

The chain price index was unchanged (0.3% y/y). The index change was held back by a 2.3% decline (-16.2% y/y) in energy prices while food prices improved 0.2% (0.7% y/y), the same as in July. Durable goods prices eased 0.3% (-2.2% y/y) while nondurable goods prices declined 0.4% (-3.0% y/y). Services prices improved 0.2% (1.9% y/y). The price index excluding food & energy notched 0.1% higher (1.3% y/y) for the fourth straight month.

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figure is in the AS1REPNA database.

Personal Income & Outlays (%) Aug Jul Jun Y/Y 2014 2013 2012
Personal Income 0.3 0.5 0.4 4.2 4.4 1.1 5.0
  Wages & Salaries 0.5 0.6 0.2 4.1 5.1 2.7 4.5
Disposable Personal Income 0.4 0.5 0.4 3.6 4.2 -0.1 5.1
Personal Consumption Expenditures 0.4 0.4 0.3 3.5 4.2 3.1 3.4
Personal Saving Rate 4.6 4.7 4.5 4.6
(Aug '14)
4.8 4.8 7.6
PCE Chain Price Index 0.0 0.1 0.2 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 0.3 0.4 0.2 3.2 2.7 -1.4 3.1
Real Personal Consumption Expenditures 0.4 0.3 0.1 3.2 2.7 1.7 1.5
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