Personal Income: Continued Modest Gains in Income and Spending

August 29, 2016
Bottom Line: Personal income and disposable income rose modestly in July. Real consumer spending rose slightly in July and increased by 3.9% annualized, led by new motor vehicle sales and services that outpaced declines in nondurable goods. Coming on the heels of the 2nd estimate of 2Q-16 GDP on Friday, this report indicates that 3Q-16 consumption started at a pace modestly slower than its 4.4% annualized rate in 2Q. Finally, consumer inflation rose modestly year-over-year but is slightly lower than the last months' year-over-year growth. Personal Income ROSE by 0.4% in July , compared with market expectations for an increase of 0.4%. The prior month was revised higher from 0.2% to 0.3%. Personal Income is now 3.3% ABOVE its year ago level. Wages and Salaries ROSE by 0.5%, Wages are now 4.1% ABOVE year ago levels. Personal Tax Payments ROSE by 0.6% and are now 1.1% ABOVE their year ago level, reflecting the year-on-year changes in employment and income. Disposable Income ROSE by 0.4% and is now 3.6% ABOVE its year ago level. Consumer Spending ROSE by 0.3%, compared with market expectations of an increase of 0.3% The prior month was revised higher. There were large increases in durable goods, 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 ROSE by 0.2 points to 5.7%. The PCE Price Index is UNCHANGED by 0.0% and is now 0.8% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.6% ABOVE its year ago level. The July level is 2.7% annualized above its Q2 level.
Article by contingentmacro