Personal Income Edges Up, Spending Dips

Personal income nationwide increased $28.6 billion, or 0.2 percent in July compared with June, according to the Bureau of Economic Analysis.

Personal income nationwide increased $28.6 billion, or 0.2 percent in July compared with June, according to the Bureau of Economic Analysis on Friday. Disposable personal income (DPI)—personal income less personal current taxes, which is good for driving the retail economy—increased $17.7 billion, or 0.1 percent, in July, compared with an increase of 0.5 percent in June.

By contrast, personal consumption expenditures (PCE, which is the government’s term for people spending money) decreased $13.6 billion, or 0.1 percent for the month. Saving was up. Personal saving—disposable personal income less personal outlays—was $739.1 billion in July, compared with $709.4 billion in June. The personal saving rate was 5.7 percent in July, compared with 5.4 percent in June.

Real PCE—PCE adjusted to remove price changes—decreased 0.2 percent in July, in contrast to an increase of 0.2 percent in June. The BEA calculated that prices increased 0.1 percent in July, compared with an increase of 0.2 percent in June. But if food and energy are taken out of the calculation, the prices were up 0.1 percent in July, the same as in June.

Consumer sentiment strengthens

Consumers were feeling a bit more cheerful by the end of August than only a few weeks earlier, the University of Michigan and Reuters reported in their consumer sentiment index on Friday. Consumer sentiment ended the month at 82.5, compared with 79.2 at mid-month August and 81.8 at the end of July.

Driving the gain was the current conditions component, just as it did for consumer confidence report, which was released separately by the Conference Board earlier in the week. The consumer sentiment current conditions component came in at 99.8 at the end of August, a bit up from 99.6 at mid-month, and much more than the reading of 97.4 at the end of July.

On the other hand, Americans are a little more skeptical about their expectations for the future health of the economy. The sentiment index’s expectations component was 71.3 at the end of August, up from 66.2 at mid-month, but down 0.5 from 71.8 at the end of July.

Wall Street bounced around on Friday ahead of the Labor Day weekend, and ended positive, with the Dow Jones Industrial Average gaining 18.88 points, or 0.11 percent. The S&P 500 was up 0.33 percent and the Nasdaq advanced 0.5 percent.