Friday, September 27, 2013

Personal Income Grew Faster Than Consumption in August

Personal Income continues its growth trend, picking up steam in August after a weaker reading in July. It grew 0.3% over the month of August. Consumption also improved slightly, growing 0.3%. Since income rose faster than consumption, the savings rate accelerated slightly to 4.6% from 4.5% in July.

Personal income growth was driven primarily by improvements in income growth, which at 4.0% is the fastest pace since February. Growth improvements were led by a surge in rental income growth as well as proprietors’ income. Disposable income grew 0.5%, the highest level in 6 months.

Consumption improved slightly, led by a 0.5% increase in durable goods. Consumer spending continues to outpace income growth, created by rising home prices and a strong stock market. Consumption of services grew 0.4%, while nondurable goods were unchanged.

Overall prices rose 0.1%. Excluding food and energy, prices were also up 0.2%. Currently, prices are 1.2% above year-ago levels, indicating low inflation.

Read the BEA release.

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