PERSONAL INCOME ROSE 0.3% IN AUGUST, CORE PCE PRICE INDEX UP 0.1%
Personal income rose 0.3% in August, slightly below the 0.4% increase expected, following a 0.5% increase in income in July. Personal consumption rose 0.6%, more than the 0.4% increase expected. That follows a 0.3% increase in July. With consumption increasing at a faster pace than income, the savings rate fell to 0.7% disposable personal income, down from 0.9% in July. The headline price index declined 0.1%, while the core price index rose 0.1% for the month. On a year-over-year basis the core price index rose 1.8% from last August, its slowest increase since February 2004. The headline price index also showed a 1.8% increase from last August’s level. After adjustment for inflation, consumer spending rose 0.6% in August, following a 0.3% increase in July. On average, July and August, real spending is up at a 2.8% annual rate from the second quarter average. If the September number sustains that pace, PCE will provide more support for third quarter GDP than did its 1.4% rate of increase in the second quarter. In real terms, consumer spending was supported by a strong increase in durable goods purchases and moderate gains in spending for services. Consumer purchases of nondurable goods were unchanged in August.
Kathryn Kobe NTKN, Washington DC