Personal Income and Spending Both Gained in May

Jon C. Ogg

Wages are up and inflation remains subdued. That’s the message from the U.S. Department of Commerce on its May 2019 personal income and spending report. Whether these are up by enough, or matching expectations, is what really matters.

Friday’s release from the Commerce Department showed that personal income increased by 0.5% (or by $88.6 billion) in the month of May over April. Disposable personal income increased by 0.5% (or $72.6 billion), and personal consumption expenditures rose by 0.4% (or $59.7 billion).

The consensus economist expectations published by Econoday were 0.3% for monthly personal income and 0.4% for monthly consumer spending in May.

Real disposable personal income was up 0.3% in May, and real personal consumption expenditures rose by 0.2%. The personal consumption expenditures price index increased by 0.2%, and the core reading that excludes food and energy saw its price index rise by the same 0.2%.

According to the Commerce Department, May’s increase in personal income came from gains in personal interest income, wages and salaries, and government social benefits. In short, the top categories all rose.

The $32.9 billion bump up in May’s real personal consumption expenditures reflected a gain of $18.5 billion in spending for goods and a $15.8 billion spending boost for services.

Spending on new motor vehicles was the leading contributor to the increase in spending on goods, while the largest gaining contributor on services spending came from food services and accommodations.

While all personal outlays rose by $62.1 billion in May, the personal savings was $985.4 billion. Personal savings as a percentage of disposable personal income figure was 6.1% in May.

A look at the personal income on a gross basis showed $18.1835 trillion on an annualized basis in May of 2019. The detailed historical table data showed that to be a gain of 4.1% from the $17.4611 trillion in May of 2018. That figure includes all wages and salaries, other income and benefits from all sectors.