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Economy in Brief

U.S. Personal Spending and Income Increase Firmly
by Tom Moeller  July 31, 2018

Personal consumption expenditures rose 0.4% (5.1% y/y) during June after a 0.5% May increase, revised from 0.2%, and a 0.6% April gain, altered from 0.5%. A 0.4% increase had been expected in the Action Economics Forecast Survey.

Real personal spending increased 0.3% (2.8% y/y) for the second straight month. In constant dollars, durable goods spending rose 0.4% (6.6% y/y) after a 0.6% gain. A 0.7% decline (+3.1% y/y) in purchases of motor vehicles & parts followed little change in May. It was countered by a 1.2% rise (7.9% y/y) in spending on furniture & and appliances which came after a 1.0% increase. Recreational goods & vehicles purchases rose 0.4% (8.4% y/y) following a 1.0% jump. Real outlays on nondurable goods eased 0.1% (+2.6% y/y) after a 0.8% jump. Clothing & footwear purchases fell 0.6% (+2.9% y/y) after a 2.3% increase while gasoline & oil buying declined 0.6% (-1.9% y/y) following a 0.8% rise. constant dollar spending on food & beverages was off 0.3% (+3.5% y/y) following a 0.9% jump. Real services spending improved 0.4% (2.2% y/y) after a 0.1% uptick. Spending on recreation services increased 0.3% (0.0% y/y) in real terms after a 0.4% decline. Real housing & utilities outlays gained 0.4% (1.3% y/y) after a 0.7% fall. Real health care outlays improved 0.4% (3.3% y/y) for the second straight month. Outlays at restaurants & hotels strengthened 1.6% in constant dollars (3.8% y/y) after a 1.3% increase.

Personal income increased 0.4% (4.9% y/y) following a 0.4% May rise and a 0.3% gain in April. The May gain was unrevised but April's increase was revised from 0.2%. A 0.4% gain had been expected. Wages & salaries improved 0.4% (4.8% y/y) following a 0.3% rise. Proprietors income increased 0.5% (5.0% y/y) after a 0.7% gain and rental incomes improved 0.6% (4.9% y/y) following a 0.4% rise. Dividend payments surged 1.2% (3.7% y/y) for the second straight month, and earlier figures were revised sharply higher. Interest income gained 0.4% (9.4% y/y) and the revised gains also were strengthened significantly. Transfer receipts increased 0.3% (4.3% y/y) after a 0.1% rise. Social security payments improved 0.4% (5.1% y/y) after rising 0.2%. Medicare payments rose 0.6% (5.0% y/y) for the second consecutive month and Medicaid payments strengthened 0.3% (5.6% y/y) following four straight months of strong increase. Unemployment insurance payments gained 0.4% (-12.8% y/y) after declining for four straight months while veterans benefits fell 2.0% (+7.0% y/y) after a similar decline in May.

Disposable personal income increased 0.4% (5.4% y/y) for the second consecutive month. May's increase was unrevised. Real disposable income improved 0.3% (3.1% y/y) after a 0.2% rise.

The personal savings rate held steady at 6.8% for the second straight month, but upward revisions raised the rate significantly back through 2016. May's rate had been set at 3.2% when released last month.

The chain type price index inched 0.1% higher last month (2.2% y/y) after two straight 0.2% gains. The index excluding food & energy also rose 0.1% (1.9% y/y) following a 0.2% rise. Energy prices eased 0.1% (+13.1% y/y) after strong gains in the prior two months. Food prices rose 0.2% (0.6% y/y) and recouped May's decline.

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.

Personal Income & Outlays (%) Jun May Apr Jun Y/Y 2017 2016 2015
Personal Income 0.4 0.4 0.3 4.9 4.4 2.6 4.9
  Wages & Salaries 0.4 0.3 0.4 4.8 4.6 2.9 5.1
Disposable Personal Income 0.4 0.4 0.3 5.4 4.4 2.8 4.4
Personal Consumption Expenditures 0.4 0.5 0.6 5.1 4.3 3.8 4.0
Personal Saving Rate 6.8 6.8 6.9 6.6
(Jun'17)
6.7 6.7 7.6
PCE Chain Price Index 0.1 0.2 0.2 2.2 1.8 1.1 0.3
  Less Food & Energy 0.1 0.2 0.1 1.9 1.6 1.7 1.3
Real Disposable Income 0.3 0.2 0.1 3.1 2.6 1.7 4.1
Real Personal Consumption Expenditures 0.3 0.3 0.4 2.8 2.5 2.7 3.7
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