Global| Sep 29 2006U.S. Personal Income Up As Expected, Core Price Inflation Tame
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income matched expectations and rose 0.3% last month after a downwardly revised 0.5% gain during July. Personal consumption rose a slightly less than expected 0.1%, held back held back by a 6.5% m/m drop (-4.7% y/y) in unit [...]
Personal consumption rose a slightly less than expected 0.1%, held back held back by a 6.5% m/m drop (-4.7% y/y) in unit vehicle sales. So far in 3Q real spending is up at a 2.7% annual rate versus last quarter, slightly better than the 2Q rate of gain.
The PCE chain price index rose an expected 0.2%, less than the 0.3% gain during the prior month. Less food & energy prices also rose an expected 0.2% (2.5% y/y), the same as this year's monthly average and the same as the monthly average increase during 2005.
Wage & salary disbursements ticked up 0.1% (7.7% y/y) following two months of 0.6% increase. Wages in the private service-producing industries were unchanged (8.5% y/y) and the average monthly increase this year has been 0.8%, double last year's monthly average. Factory sector wages fell 0.1% (+6.5% y/y) and the average monthly increase this year has been 0.8% versus a 0.2% average during 2005.
Interest income fell by 0.2% (+8.4% y/y) for the second consecutive month but dividend income surged for the third month by 1.0% (11.4% y/y).
Disposable personal income increased 0.4% (8.8% y/y). Personal taxes fell slightly (+14.0% y/y).
Adjusted for price inflation, disposable personal income increased 0.3% (5.3% y/y), up slightly from this year's 0.2% average and up from the 0.1% average monthly decline last year. Real disposable income per capita rose 0.1% (4.4% y/y).
The personal savings rate was a slightly less negative -0.5% last month and so far in 2006 has averaged -0.5%, the same as last year. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available here.
Borrowing by U.S. Households from the Federal Reserve Bank of Richmond can be found here.
Middle Class in Turmoil: Economic Risks Up Sharply for Most Families Since 2001 from the Center for American Progress is available here.
| Disposition of Personal Income | August | July | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Personal Income | 0.3% | 0.5% | 9.4% | 5.2% | 6.2% | 3.2% |
| Personal Consumption | 0.1% | 0.8% | 5.0% | 6.5% | 6.6% | 4.8% |
| Savings Rate | -0.5% | -0.7% | -3.0% (Aug. '05) | -0.4% | 2.0% | 2.1% |
| PCE Chain Price Index | 0.2% | 0.3% | 3.2% | 2.9% | 2.6% | 2.0% |
| Less food & energy | 0.2% | 0.1% | 2.5% | 2.1% | 2.0% | 1.4% |
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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