• Income decline due to lower unemployment insurance payments.

• Spending continues to strengthen.

• Price inflation eases.

Personal income declined 2.7% during August (+4.7% y/y) following a 0.5% July rise, revised from 0.4%. A 2.1% drop had been expected in the Action Economics Forecast Survey. A 52.0% decline in unemployment insurance benefits accounted for the outsized decline as it followed a 6.0% July shortfall. Wages & salaries rose 1.3% (-0.5% y/y), strong for the for the fourth consecutive month but they eased 0.5% y/y. Proprietors jumped 2.7% (-1.4% y/y) and rental income strengthened 1.2% (2.7% y/y). Disposable personal income declined 3.2% (+5.4% y/y) in August. Adjusted for price inflation, take-home pay decreased 3.5% (+4.0% y/y) following a 0.3% rise.

Personal consumption expenditures increased 1.0% last month (-1.9% y/y) after rising 1.5% in July, revised from 1.9%. A 0.8% increase had been expected. Adjusted for price inflation, spending improved 0.7% but remained down 3.2% y/y. Real spending on durable goods held steady (11.2% y/y) following three consecutive months of strong increase. Spending on motor vehicles increased 0.8% (7.0% y/y) while home furnishings purchases fell 1.5% (+8.0% y/y). Purchases of recreational goods eased 0.5% (+21.3% y/y), about the same as in July. Real spending on nondurable goods slipped 0.3% (+3.0% y/y) last month as clothing purchases dropped 0.6% (-3.7% y/y) after falling 1.6% in July. Spending on services rose 1.1% (-7.2% y/y) last month after rising 1.3%. Spending at hotels and restaurants rose 6.7% (-17.9% y/y), strong for the fourth straight month. Spending on recreation rose 3.6% but was off roughly one-third y/y. Transportation services outlays rose 2.4% (-22.6% y/y).

Last month's rise in spending relative to income lowered the personal saving rate to 14.1% from 17.7% in July. The rate reached a record high 33.6% in April. The level of personal saving increased 103.8% y/y.

The PCE chain price index increased 0.3% (1.4% y/y) in August following an upwardly revised 0.4% July rise. The price index excluding food and energy also rose 0.3% (1.6% y/y) after an upwardly revised 0.4% increase in July. Energy prices increased 0.8% (-9.4% y/y), strong for the third straight month. Food prices eased 0.1% (+4.3% y/y).

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.