U.S. Personal Income Gain Moderates; Spending Remains Firm

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.