Personal Income Jumps But Spending Weak

Personal income rose 0.4% in August but spending, both nominal and real, rose a weak 0.1%

August Personal Income and Outlays

  • Personal income increased $73.5 billion (0.4 percent)
  • Disposable personal income (DPI) increased $77.7 billion (0.5 percent)
  • Personal consumption expenditures (PCE) increased $20.1 billion (0.1 percent).
  • Real DPI increased 0.4 percent in August and Real PCE increased 0.1 percent.
  • The PCE price index increased less than 0.1 percent.
  • Excluding food and energy, the PCE price index increased 0.1 percent.

The above synopsis from the BLS Personal Income and Outlays report for August.

July Revisions

The reports are nearly mirror images. In July real income was weak (0% growth) but spending was moderate (+0.3%) growth.

Mike "Mish" Shedlock

Comments (10)
No. 1-9
Casual_Observer
Casual_Observer

"Excluding" blah blah blah. How can you exclude anything when it comes to reality ?

Casual_Observer
Casual_Observer

Earnings at leveraged loan issuers slump prompting more scrutiny for $1.2T market Issuers of U.S. leveraged loans recently posted a second straight quarter of razor-thin earnings growth and decline in cash-flow coverage, as the business-cycle dashboard flashes warning signals regarding this longest-ever period of U.S. expansion.

The softening of key metrics is of particular concern to participants in the nearly $1.2 trillion leveraged loan space, which entails credits to riskier, speculative-grade borrowers. Over the past decade, the popularity of covenant-lite loans in this market has skyrocketed, while other investor protections traditionally found in leveraged loans have evaporated, amid intense investor demand.

Tony Bennett
Tony Bennett

Personal income up $73.5 billion in August.

Fedgov deficit $200 billion in August.

Business as usual.

shamrock
shamrock

So over the last 2 months both income and spending are up 0.4%. Pretty perfect. GDP Estimates for 3rd quarter are now over 2%. Stock market holding steady.

bradw2k
bradw2k

Adding up their monthly 2012-dollar numbers:

  • disposable income increased approx ~1.0% since March
  • personal consumption increased ~1.3% since March
RonJ
RonJ

"Excluding food and energy, the PCE price index increased 0.1 percent."

We need the added diversity of food and energy in order to have an inclusive PCE price index.

Matt3
Matt3

Why the "But"? Isn't good news when incomes are rising faster than expenditures? Should this have read "And"?

Country Bob
Country Bob

Only in ponzi-land would we have someone upset that people spent less than they earned.

If people added savings (or paid down debt), we should be celebrating.

If only we could get the criminals in Washington DC to cut their spending