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Personal Income:  Income Rises Less Than Expected As Core PCE Steadies

August 1, 2017
Bottom Line: Both overall personal and disposable income were unchanged in June. Overall spending rose, driven by an increase in medical services that was partially offset by durable and nondurable goods spending. The Q2 spending average was 2.8% annualized above its Q1 level, confirming consumption figures from the initial 2Q GDP report. Core PCE, the Fed's preferred inflation metric, grew just 0.11%, 1.6% annualized in the last 3 months and 1.5% over the last 12 months.

Personal Income was UNCHANGED in June, compared with market expectations for an increase of 0.4%. The prior month was revised lower from 0.4% to 0.3%. Personal Income is now 2.6% ABOVE its year ago level.

Wages and Salaries ROSE by 0.4%, Wages are now 2.5% ABOVE year ago levels. Personal Tax Payments were nearly UNCHANGED and are now 2.5% ABOVE their year ago level, reflecting the year-on-year changes in employment and income.

Disposable Income was nearly unchanged and is now 2.6% ABOVE its year ago level.

Consumer Spending ROSE by 0.1%, compared with market expectations of an increase of 0.1% The prior month was revised higher. There were small declines in durable goods and small declines in nondurable goods spending and small increases in services spending. Spending is now 3.8% ABOVE its year ago level.

The Saving Rate FELL by 0.1 points to 3.8%.

The PCE Price Index was UNCHANGED and is now 1.4% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.5% ABOVE its year ago level.

Real Consumer Spending was UNCHANGED and is now 2.4% ABOVE its year ago level. The Q2 spending average was 2.8% annualized above its Q1 level.