Are Incomes Going Down? (Not Really).

Personal income decreased $3.5 billion (less than -0.1 percent) in June according to estimates released by the government’s Bureau of Economic Analysis. Huh?

Disposable personal income (DPI) decreased $4.2 billion (less than -0.1 percent) and personal consumption expenditures (PCE) increased $8.1 billion (0.1 percent).

Real DPI decreased 0.1 percent in June and Real PCE increased less than 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.

Apparently, the decrease in personal income in June primarily reflected decreases in personal dividend income and personal interest income that were partially offset by an increase in compensation of employees.

The June decrease in personal dividend income reflected a return to prior levels after a notable increase in May.

It’s Not Just What You Make, It’s What You Spend That Counts

The $4.5 billion increase in real PCE in June primarily reflected a $10.0 billion increase in spending for services that was partially offset by a decline of $4.4 billion in spending for nondurable goods and a decline of $2.3 billion in spending for durable goods.

Within services, the primary contributor to the increase was spending for health care. Within goods, gasoline was the leading contributor to the decline. Detailed information on real PCE spending can be found on NIPA Table 2.3.6.

Personal outlays increased $14.1 billion in June. Personal saving was $546.4 billion in June and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.8 percent.

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