Personal Income & Spending Heading the Wrong Way

The Commerce Department has just released its data on Personal Income and Spending for the month of June.  Income came in at -1.3%, and Dow Jones had estimates at -1.2% as the consensus.  We’d also note that the May figure was revised to +1.3% from +1.4%.  On the surface, this may be the largest drop in percentage terms of income in nearly four years.  Some of this drop is being attributed to ‘seasonal adjustments.’

Low income didn’t hold down spending.  Spending rose by +0.4%, but much of this is being attributed to gasoline prices, yet Dow Jones had estimates at +0.3%.  if you use the PCE and adjust for inflation, the Commerce Department said this spending figure would have come in at -0.1%.

Disposable personal income fell by -1.3% in June.  It looks like this average work week getting shorter and shorter is takings its toll.  It is hard to imagine inflation getting too far out of control with income heading this way, although some of the data today refutes that logic.  Strange times indeed.

JON C. OGG
AUGUST 4, 2009