Americans’ Income, Spending Growth Slows

Print Email

In its report on personal income and spending for July, the U.S. Bureau of Economic Analysis data shows that personal income in current dollars grew by 0.1% month-over-month, as did personal spending (called personal consumption expenditures, or PCE). Real disposable personal income rose 0.1%, and real PCE rose less than 0.1%. “Real” figures are given in chained 2005 dollars.

Consensus estimates had called for month-over-month growth of 0.2% in personal income and 0.3% in spending.

Some of the details are disheartening. Private wages and salaries fell $15.3 billion in July after an increase of $31.3 billion in June. The impact of federal budget cuts reduced government wages and salaries by $7.7 billion in July, compared with a drop of $700 million in June.

Current taxes decreased by $7.8 billion, after an increase of $11 billion in June. Falling wages and salaries pave the road for lower tax collections.

The personal savings rate was essentially unchanged month-over-month at 4.4%.

The core PCE price index rose 0.1% in July compared with a rise of 0.2% in June. Annualized, that calculates out to an inflation rate of 1.2%, and could be a signal to the Fed to keep the stimulus spending at current levels when the FOMC meets next month. There are many economists and arguments supporting more inflation as a way to boost employment.

RSS Facebook Twitter