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Economy in Brief
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Industrial output among EMU members fell by 1.8% month-to-month in March...
U.S. Producer Price Inflation Moderates in April
The Producer Price Index for Final Demand increased 0.5% during April...
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Affordable homes are in short supply...
U.S. Unemployment Claims Edge Upward
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U.K. Shows Scatter-Shot IP Trends
Industrial output in the United Kingdom is mixed and convoluted...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller October 1, 2020
• 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.
Personal Income & Outlays (%) | Aug | Jul | Jun | Aug Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Personal Income | -2.7 | 0.5 | -1.2 | 4.7 | 3.9 | 5.3 | 4.9 |
Wages & Salaries | 1.3 | 1.3 | 2.1 | -0.5 | 4.7 | 5.0 | 4.7 |
Disposable Personal Income | -3.2 | 0.3 | -1.5 | 5.4 | 3.7 | 5.8 | 4.9 |
Personal Consumption Expenditures | 1.0 | 1.5 | 6.5 | -1.9 | 3.9 | 4.9 | 4.5 |
Personal Saving Rate | 14.1 | 17.7 | 18.7 | 7.3 (Aug '19) | 7.5 | 7.8 | 7.2 |
PCE Chain Price Index | 0.3 | 0.4 | 0.5 | 1.4 | 1.5 | 2.1 | 1.8 |
Less Food & Energy | 0.3 | 0.4 | 0.3 | 1.6 | 1.7 | 2.0 | 1.7 |
Real Disposable Income | -3.5 | -0.0 | -2.0 | 4.0 | 2.2 | 3.6 | 3.1 |
Real Personal Consumption Expenditures | 0.7 | 1.1 | 5.9 | -3.2 | 2.4 | 2.7 | 2.6 |