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Economy in Brief

U.S. Personal Spending and Income Improve
by Tom Moeller  August 29, 2016

Personal consumption expenditures increased 0.3% (3.8% y/y) during July following a 0.5% June rise, revised from 0.4%. The latest gain matched expectations in the Action Economics Forecast Survey. So far this year, spending has risen at a 4.5% annual rate compared to a 3.5% rise during all of last year. Adjusted for price inflation, spending rose 0.3% (3.0% y/y) last month after a 0.4% gain.

Current dollar purchases of nondurable goods declined 0.5% (+0.4% y/y) as gasoline purchases fell 3.7% (-16.9% y/y) with lower prices. Clothing purchases also eased 0.1% (+1.4% y/y). Durable goods spending jumped 1.6% (3.8% y/y) after a 0.3% rise. Motor vehicle & parts spending strengthened 4.5% (2.1% y/y), and furnishings & durable household equipment buying improved 0.5% (5.0% y/y). Services spending gained 0.4% (4.9% y/y), the weakest increase since March. Recreation services buying increased 1.2% (5.3% y/y), but spending on food services & accommodations remained unchanged (5.2% y/y).

Personal income improved 0.4% during July (3.3% y/y) following increases of 0.3% in the two prior months. A 0.4% rise had been expected. Disposable personal income gained 0.4% (3.6% y/y). In chained dollars, take-home pay also increased 0.4% (2.7% y/y), the strongest rise since December. So far this year, real disposable income has risen at a 2.4% annual rate.

Wage & salary income gained 0.5% (4.1% y/y) as it did in June. Manufacturing sector wages strengthened 0.8% (3.5% y/y) and service-producing wages rose 0.5% (4.5%.y/y). Government sector wages improved 0.3% (2.8% y/y). Rental income grew 0.7% (6.8% y/y), but proprietors income gained just 0.2% (2.3% y/y). Receipts on assets recovered 0.3% (-0.6% y/y) after a 0.2% fall. Transfer receipts jumped 0.4% (3.5% y/y), the strongest gain since February.

The personal savings rate rose to 5.7% after a decline to 5.5%. It remained down from 6.1% averaged both in Q1'16 and in Q4'15. Personal saving increased 0.5% y/y.

The PCE Chain Price Index remained unchanged (0.8% y/y), the weakest performance since February. Nondurable goods prices declined 0.4% (-2.1% y/y) as gasoline prices fell 4.2% (-18.9% y/y). Apparel prices rose 0.1% but were flat y/y. The durable goods price index declined 0.3% (-2.3% y/y) as home furnishing and durable household equipment prices fell 0.5% (-2.8% y/y). Remaining unchanged were both motor vehicle prices (-4.6% y/y) and recreational vehicle & product prices (-4.6% y/y). The services price index gained 0.2% (2.3% y/y).

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. Further detail is in USNA.

Personal Income & Outlays (%) Jul Jun May Jul Y/Y 2015 2014 2013
Personal Consumption Expenditures 0.3 0.5 0.3 3.8 3.5 4.4 2.8
Personal Income 0.4 0.3 0.3 3.3 4.4 5.2 1.1
  Wages & Salaries 0.5 0.5 0.4 4.1 5.1 5.1 2.7
Disposable Personal Income 0.4 0.3 0.3 3.6 3.8 5.1 -0.1
Personal Saving Rate 5.7 5.5 5.8 5.8
(Jul. '15)
5.8 5.6 5.0
PCE Chain Price Index 0.0 0.1 0.2 0.8 0.3 1.5 1.3
  Less Food & Energy 0.1 0.1 0.2 1.6 1.4 1.6 1.5
Real Personal Consumption Expenditures 0.3 0.4 0.2 3.0 3.2 2.9 1.5
Real Disposable Income 0.4 0.2 0.1 2.7 3.5 3.5 -1.4
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