Friday, August 30, 2013

Personal Income & Consumption Grow 0.1% in July

Personal income growth decelerated in July, growing 0.1%, after two consecutive months of 0.3% growth. This represents the weakest growth since April. Consumption also decelerated, growing 0.1% in July. The savings rate remained constant relative to the previous month at 4.4%. This level is low by historical standards.

The deceleration of person income was driven primarily by wage income, which declined 0.3%, the first decline since January. Growth was also restrained by a decline in interest income. Strong growth in dividend income slightly offset these negative effects on person income. Disposable income rose 0.2%.

While consumption did slow, there was still growth as pent-up demand and wealth effects lifted consumer spending. The growth in consumption was led by nondurable goods, which rose 0.9% in July. Consumption of durable goods fells 0.2%, while expenditures on services were unchanged.

Overall prices rose 0.1%. Excluding food and energy, prices were also up 0.1%. Currently, prices are 1.4% above year-ago levels, indicating low inflation, although it is the highest reading since February.

Read the Bureua of Economic Analysis release.

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