Personal Income Gain Lags as Spending Rises and Savings Rate Drops


The U.S. Department of Commerce’s Bureau of Economic Analysis has released one more look at what is happening at the individual level inside the U.S. economy. Personal income and outlays have been released for the month of September. On the surface it appears spending rose faster than income.

Personal income increased by $46.7 billion, or 0.3%, in September. Disposable personal income rose by $37.0 billion, or 0.3%, and the personal consumption expenditures increased by $61.0 billion, or 0.5%.

Bloomberg was calling for a 0.4% rise in personal income and for a 0.5% rise in personal consumption expenditures.

One issue that may stand out here is the component for real disposable income. This level rose by less than 0.1% in September, while real personal consumption expenditures rose by 0.3%.

The pricing data looks muted on the monthly reports, but the year-over-year readings are far different. The monthly personal consumption expenditures price index was up by 0.2%, and the monthly core personal consumption expenditures (excluding food and energy) rose by 0.1%. On a year-over-year basis, the personal consumption expenditures price index was up 1.2% on the headline and was up by 1.7% on the core price index.

As noted in last week’s data, the consumer income was not moving into savings. The savings rate was down 0.1% but was still at 5.7% of income.

Individual data were compiled below:

  • The increase in personal income in September primarily reflected increases in compensation of employees and nonfarm proprietors’ income.
  • The increase in real personal consumption expenditures in September primarily reflected an increase in spending for durable goods.
  • Personal spending increased by $59.7 billion in September.
  • Personal saving was $797.8 billion in September, and the personal saving rate, personal saving as a percentage of disposable personal income, was 5.7%.

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