Personal income fell 0.1% during August, the first decline since October 2009 according to a Bureau of Economic Analysis report released this morning. Wage income drove the decline posting a fall of 0.2%.
Dividend and rental income provided support for some, mostly upper income consumers; however, interest income growth remains weak. Also, growth in transfer payments has slowed dramatically.
Declining wages and personal income in August caused consumer spending to post a modest increase. Consumer spending rose 0.2% just enough to keep up with inflation. The savings rate fell for the second month to 4.5%, the lowest level since December 2009, as consumers reduce savings to avoid declines in their real spending.
Consumer prices rose 0.2% in August a smaller increase than seen in July (0.4%). Core inflation rose 0.1%, the slowest since March. Inflation remains low but is rising.
Read the release.