Global| Sep 30 2005U.S. Personal Income Fell
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income fell 0.1% last month after an unrevised 0.3% gain in July. Consensus expectations had been for a 0.3% August increase. The Commerce Department indicated that declines in rental & proprietors' income due to Hurricane [...]
Personal income fell 0.1% last month after an unrevised 0.3% gain in July. Consensus expectations had been for a 0.3% August increase. The Commerce Department indicated that declines in rental & proprietors' income due to Hurricane Katrina probably reduced the two measures by a combined $100 billion annualized.
Wages & salaries rose 0.2% (6.6% y/y) in August following an upwardly revised 0.7% increase in July. Factory sector wages rose 0.1% (4.7% y/y) after a 0.5% July increase. Service sector wages rose 0.2% (7.7% y/y) after an upwardly revised 0.9% July surge.
Disposable personal income fell 0.1% (+4.4% y/y) following two months of 0.4% increase. Adjusted for prices which rose 0.5%, take home pay fell 0.5% (+1.4% y/y).
Personal consumption expenditures fell 0.5% due to a sharp drop in light vehicle sales that pulled spending on durables down 8.9% (+3.2% y/y). Nondurables outlays surged 1.1% (9.4% y/y). Spending on gasoline & fuel oil rose 5.7% (32.4% y/y) pumped by an 8.6% m/m increase in gasoline prices that rose another 16.8% this month. Services spending increased 0.4% (5.9% y/y) for the second consecutive month.
The personal savings rate remained negative for the third consecutive month. Nevertheless, the Federal Reserve indicated last week that household sector net worth (from the Flow of Funds Accounts) improved in 2Q to a four year high due to an increase in owners' equity in real estate which has averaged 11.3% per year since 2001.
The PCE chain price index rose 0.5% last month. Less food & energy prices rose 0.2% (2.0% y/y) following two months of 0.1% gain.
What's Driving Wage Inequality? from the Federal Reserve Bank of Richmond can be found here.
Inflation Modeling: A Policy Maker's Perspective, remarks made by Federal Reserve Board Governor Donald L. Kohn is available here.
| Disposition of Personal Income | Aug | July | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Personal Income | -0.1% | 0.3% | 5.6% | 5.9% | 3.2% | 1.8% |
| Personal Consumption | -0.5% | 1.2% | 6.6% | 6.5% | 4.9% | 4.2% |
| Savings Rate | -0.7% | -1.1% | 1.5% | 1.7% | 2.1% | 2.4% |
| PCE Chain Price Index | 0.5% | 0.3% | 3.0% | 2.6% | 1.9% | 1.4% |
| Less food & energy | 0.2% | 0.1% | 2.0% | 2.0% | 1.3% | 1.8% |
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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