Global| Jul 31 2007U.S. Personal Income About On Forecast, Core Prices Again Up 0.1%
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income rose 0.4% last month, the same as during May. The June increase about matched Consensus expectations for a 0.5% gain. The June increase at 6.1% y/y left income growing near the rate of increase during the last three [...]
Personal income rose 0.4% last month, the same as during May. The June increase about matched Consensus expectations for a 0.5% gain. The June increase at 6.1% y/y left income growing near the rate of increase during the last three years.
The report of a 0.1% increase in the PCE chain price index during June brought with it a 0.1% rise in the core PCE price measure, the fourth 0.1% increase in a row. It was slightly below expectations for a 0.2% gain. annualized, the gain in core prices came in at 1.6% over the last three months. The increase in the total PCE price index was 3.8% during the same three months (AR): down from the 5.0% three month gain during May. 
Wages & salaries increased 0.5% (6.7% y/y) and factory sector wages rose the same 0.5% (5.6% y/y) after a 0.1% May rise.Wage & salary income in service producing industries rose 0.6% (7.4% y/y) after a 0.5% increase in May while pay in the government sector rose 0.4% (5.0% y/y).
Interest income ticked up 0.1% (1.1% y/y) for the third consecutive month while dividend income rose 1.0% (14.2% y/y), about the same as during the prior six months.
Personal current taxes increased 0.7% (10.7% y/y). That left disposable personal income to grow 0.4% (5.5% y/y) after a 0.4% May gain. Real disposable personal income thus rose 0.3% (3.1% y/y) last month after a 0.1% decline during May.
Personal consumption expenditures increased just 0.1% in June following a little revised 0.6% gain during May. Expectations were for 0.2% rise. Durable goods purchases reversed all of the prior month’s increase with a 1.6% (+2.6% y/y) decline as spending on motor vehicles fell 2.1% (+2.0% y/y) and spending on furniture & other household equipment fell 1.0% (+2.5 y/y. Lower gasoline prices dropped spending on gasoline by 0.4% (+4.4% y/y) and spending on apparel fell 0.8% (+3.5% y/y). One of the few increases in spending last month was on medical care by 0.5% (6.3% y/y).
The personal saving rate was back in positive territory as earlier upward revisions brought it to 0.6% in June.
| Disposition of Personal Income | June | May | Y/Y | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| Personal Income | 0.4% | 0.4% | 6.1% | 6.6% | 5.9% | 6.2% |
| Personal Consumption | 0.1% | 0.6% | 5.2% | 5.9% | 6.2% | 6.4% |
| Saving Rate | 0.6% | 0.4% | 0.5% (June 06) | -1.1% | -0.4% | 2.0% |
| PCE Chain Price Index | 0.1% | 0.5% | 2.3% | 2.8% | 2.9% | 2.6% |
| Less food & energy | 0.1% | 0.1% | 1.9% | 2.2% | 2.2% | 2.1% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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