Haver Analytics
Haver Analytics
| Aug 31 2023

U.S. Personal Spending Growth Accelerates, but Income Gain Remains Weak; Inflation Steadies

  • Real spending rise is strongest since January.
  • Wage & salary growth weakens.
  • Growth in price index remains low.

Personal consumption expenditures (PCE) increased 0.8% during July (6.4% y/y) following a 0.6 June rise, revised from 0.5%. A 0.7% gain had been expected in the Action Economics Forecast Survey. Adjusted for price increases, PCE rose 0.6% after gaining 0.4% in June. The y/y rise of 3.0% in real PCE was the strongest since February of 2022.

Real spending on durable goods jumped 1.4% (5.4% y/y) in July after a 1.1% June gain. Spending on motor vehicle & parts rose 0.6% (8.4% y/y) after rising 0.9% in June. Real spending on furniture & appliances rose 1.1% (2.9% y/y) after strong gains in both of the prior two months. Real spending on recreational goods & vehicles surged 2.5% (7.0% y/y) after strong increases in each of the prior three months.

Real spending on nondurable goods rose 0.7% last month (2.1% y/y) after gaining 0.5% in June. Real apparel spending surged 1.5% (0.7% y/y) after negligible gains in each of the prior three months. Real food & beverage outlays rose 0.5% (0.4% y/y) following a 0.2% gain. Real outlays on gasoline & other energy products declined 1.6% (+5.8% y/y) after increasing 2.0% in June.

Real spending on consumer services rose 0.4% (2.9% y/y) in July after a 0.3% June rise. Financial services & insurance expenditures surged 1.1% (3.0% y/y) after strengthening 1.3% in June. Real hotel & restaurant spending strengthened 1.1% (4.3% y/y) following a 0.6% improvement. Real transportation services outlays rose 0.4% (4.2% y/y) following a 0.5% decline while real housing & utilities expenditures also rose 0.4% (1.5% y/y) after a 0.3% June improvement. Real healthcare spending gained 0.2% (5.5% y/y) in July after two months of 0.1% rise but recreation services outlays fell 0.5% (+4.3% y/y) after surging 1.5% in June.

Personal income rose 0.2% in July (4.6% y/y) after increasing an unrevised 0.3% in June. A 0.3% rise had been expected. It was the weakest increase since December of last year. The gain reflected a 0.4% increase (4.8% y/y) in wages & salaries which followed a 0.6% June rise. Proprietors' income rose 0.5% (4.2% y/y) last month after a June rise of 0.4%. Rental income surged 1.1% (10.5% y/y) after a 0.4% rise. Receipts on assets held steady (+4.0% y/y) following a 0.3% June decline. Interest income rose 0.3% (6.4% y/y) after two consecutive 0.6% increases but dividend income declined 0.2% (+1.5% y/y) following a 1.2% drop. Personal transfer receipts weakened 0.6% (+4.1% y/y) in July after falling 0.3% in June.

Disposable personal income held steady (+7.2% y/y) in July following a 0.2% rise in June. Taxes strengthened 1.3% (-10.1% y/y) after rising 0.6% in June. Real disposable income fell 0.2% (+3.8% y/y) last month after holding steady in June.

The personal savings rate fell to 3.5% in July from 4.3% in June. It was the lowest savings rate since November of last year and below the May high of 4.7%. The level of personal savings fell 17.2% (+9.4% y/y) last month following a 9.3% June decline.

The PCE chain price index rose 0.2% (3.3% y/y) last month, the same as in June. The index excluding food & energy rose 0.2% (4.2% y/y), also the same as in June. These increases remain down from the 0.6% August 2022 high. Goods prices fell 0.3% (-0.5% y/y) following two straight 0.1% declines. Durable goods prices were off 0.7% (-0.8% y/y) after falling 0.3% in June. Nondurables prices were little changed (-0.2% y/y) after edging 0.1% higher in June. Services prices gained 0.4% (5.2% y/y) following a 0.3% rise. The services price index excluding energy & health care increased 0.5% (6.4% y/y), down from a high of 0.7% in January. Energy prices edged 0.1% higher (-14.6% y/y) in July following a 0.6% rise while food prices rose 0.2% last month (3.5% y/y) after easing 0.1% in June.

The personal income and consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.

  • 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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