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Economy in Brief

Healthy Spending Accompanies Modest U.S. Personal Income
by Gerald D. Cohen  August 30, 2019

Personal income edged up 0.1% (4.6% year-on-year) in July after an upwardly-revised 0.5% gain in June (was 0.4%). The Action Economics Forecast Survey expected 0.3%. Employee compensation grew 0.2% (5.0% y/y), transfers were up a healthy 0.4% (7.1% y/y) and proprietors' income increased 0.5% (3.7% y/y). Meanwhile, receipts from assets fell 0.8% in June (+1.7% y/y). As a result of a 0.9% drop in tax payments (+5.8% y/y), disposable personal income rose 0.3% (4.5% y/y). When adjusted for inflation, disposable income ticked up 0.1% (3.0% y/y).

Personal consumption expenditures grew 0.6% in July, a tad better than the 0.5% anticipated by the Action Economics Forecast Survey. Inflation-adjusted consumption increased 0.4% (2.7% y/y) with goods and services spending up 0.8% (4.5% y/y) and 0.3% (2.0% y/y) respectively. Durable goods spending jumped 1.1% (5.7% y/y) despite a 0.2% decline in vehicles (+2.9% y/y) -- furniture as well as recreation goods and vehicles sales showed strong gains (1.1% and 2.4%; 2.7% and 12.2% y/y respectively).

As a result of the combination of weak income growth and strong spending, the personal savings rate declined to a still healthy 7.7% in July from 8.0% in June.

The personal consumption chain price headline and core indexes both rose 0.2% in July (1.4% and 1.6% y/y respectively).

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

Personal Income & Outlays (%) Jul Jun May Jul Y/Y 2018 2017 2016
Personal Income 0.1 0.5 0.4 4.6 5.6 4.7 2.6
  Wages & Salaries 0.2 0.5 0.1 5.2 5.0 4.7 2.9
Disposable Personal Income 0.3 0.4 0.3 4.5 6.1 4.7 2.8
Personal Consumption Expenditures 0.6 0.3 0.5 4.1 5.2 4.4 3.8
Personal Saving Rate 7.7 8.0 8.0 7.5 (Jul'18) 7.7 7.0 6.8
PCE Chain Price Index 0.2 0.1 0.1 1.4 2.1 1.8 1.0
  Less Food & Energy 0.2 0.2 0.1 1.6 2.0 1.6 1.6
Real Disposable Income 0.1 0.3 0.2 3.0 4.0 2.9 1.8
Real Personal Consumption Expenditures 0.4 0.2 0.4 2.7 3.0 2.6 2.7
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