Americans' Income, Spending Growth Slows

Money, US, $100 billsIn its report on personal income and spending for July, the US Bureau of Economic Analysis data shows that personal income in current dollars grew by 0.1% month-over-month, as did personal spending (called 'personal consumption expenditures' or PCE). Real disposable personal income rose 0.1% and real PCE rose less than 0.1%. 'Real' figures are given in chained 2005 dollars.

Consensus estimates had called for month-over-month growth of 0.2% in personal income and 0.3% in spending.

Some of the details are disheartening. Private wages and salaries fell $15.3 billion in July after an increase of $31.3 billion in June. The impact of federal budget cuts reduced government wages and salaries by $7.7 billion in July compared with a drop of $700 million in June.

Current taxes decreased by $7.8 billion after an increase of $11 billion in June. Falling wages and salaries pave the road for lower tax collections.

The personal savings rate was essentially unchanged month-over-month at 4.4%.

The core PCE price index rose 0.1% in July compared with a rise of 0.2% in June. Annualized that calculates out to an inflation rate of 1.2%, and could be a signal to the Fed to keep the stimulus spending at current levels when the FOMC meets next month. There are many economists and arguments supporting more inflation as a way to boost employment.

Filed under: Economy
Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.