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Friday, August 2, 2013

Personal Income Grew 0.3% in June as Consumption Increased 0.5%

Personal income continued its steady growth, increasing 0.3% in June. Consumption improved 0.5%, the largest gain in 4 months. The uptick in consumption caused the savings rate to decline slightly in June to 4.4%, down from 4.6% in May. This level is very low by historical standards.



Personal income growth was driven primarily by wages, which improved 0.5% in June. Disposable income only grew by 0.3% over the month as tax payments grew faster than income.

Nominal consumption spending increased 0.5% in June, led by both durable and non-durable goods. When accounting for 0.2% inflation, real spending increased slightly at 0.1%, the same gains seen in the last two months. Durable goods grew 0.9% and non-durable goods increased 1.3%, the highest gains since February. Service spending rose 0.2% over the month.

Inflation was moderate in June, with the PCE deflator indicating a 0.4% rise in prices. Prices had remained stagnant or fell in the previous two months. Core prices strengthened 0.2% in June. Currently prices are 1.3% above year-ago levels, indicating low inflation.

Read the BEA release.

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