Personal income outpaces spending in July

PBN Staff

08/31/2007

PERSONAL SAVINGS increased for the third straight month in July, to $72.2 billion or 0.7% of total disposable income, the BEA said. /

WASHINGTON – U.S. personal income rose faster than expenses, according to a report today by the U.S. Commerce Department’s Bureau of Economic Analysis.

Personal consumption expenditures (PCE) rose 0.4 percent last month to a seasonally adjusted $ 9.7 trillion, the BEA said. The increase exceeded expectations among 80 economists surveyed by Bloomberg News, whose median forecast called for the PCE to rise 0.3 percent.
At the same time, the BEA said, personal income from all sources rose 0.5 percent in July to a seasonally adjusted $11.7 trillion, accelerating from June’s revised increase of 0.4 percent. Analysts had predicted a 0.3-percent rise.
Prices increased 0.4 percent, the BEA said. Its PCE price index rose 0.4 percent to 117.7 points (2000 = 100) after rising 0.2 percent in June and 0.6 percent in May.
The core price index excluding food and energy increased 0.1 percent – to 1.9 percent above its year-ago level – lagging the revised June increase of 0.2 percent. The Bloomberg survey had predicted prices would increase 0.2 percent.
Meanwhile, the personal savings rate increased for the third month in a row, rising to 0.7 percent of disposable personal income in July from the previous month’s 0.6 percent. Total personal savings increased to $72.2 billion.
Wages and salaries increased $26.9 billion last month after rising $28.7 billion in June, while bonuses and other supplements surged $6.3 billion in July after rising $5.6 billion in June.
Real personal disposable income – the total after-tax income available for spending or saving, adjusted for inflation – picked up speed, rising 0.5 percent in July after rising 0.2 percent in June.
Additional information, including the 12-page Personal Income and Outlays news release, is available from the U.S. Commerce Department’s Bureau of Economic Analysis at www.bea.gov.