U.S. personal income rises in August as consumer spending accelerates
Fresh U.S. household data for August show income, spending and inflation measures moving higher at the same time. The release also includes annual revisions to the National Economic Accounts, with updates to personal income and outlays estimates going back to January 2021.
Highlights
- U.S. personal income rose $66.6 billion, or 0.2%, in August, while disposable personal income increased $68.6 billion, or 0.3%.
- Personal consumption expenditures climbed $190.8 billion, or 0.9%, with real PCE up $92.8 billion, or 0.6% in August.
- Headline PCE price index increased 0.3% month-over-month and 3.4% year-over-year, while core PCE rose 0.2% monthly and 3.0% annually.
August income and spending gains
As reported by U.S. Bureau of Economic Analysis, personal income increases by $66.6 billion, or 0.2% at a monthly rate, in August, while disposable personal income rises by $68.6 billion, or 0.3%, and personal consumption expenditures climb by $190.8 billion, or 0.9%. Personal outlays, which include consumption, interest payments and transfer payments, increase by $190.7 billion during the month.Personal saving stands at $990.2 billion in August, and the personal saving rate is 4.1% of disposable personal income. The gain in current-dollar personal income is driven mainly by higher compensation and government social benefits.
Within compensation, private wages and salaries lead the increase, based on U.S. Bureau of Labor Statistics Current Employment Statistics data. Within government social benefits, Medicare and Social Security benefits are the main contributors to the monthly rise.
Inflation readings and broader economic signals
Consumer spending growth is split between a $114.1 billion increase in goods spending and a $76.7 billion increase in services spending. Real personal consumption expenditures increase by $92.8 billion, or 0.6% at a monthly rate, indicating that spending rises even after adjusting for prices.The PCE price index, a closely watched inflation gauge, increases 0.3% from the previous month in August, while the core measure excluding food and energy rises 0.2%. From a year earlier, the headline PCE price index is up 3.4%, and the core index increases 3.0%, offering an updated view of inflation pressures facing the U.S. economy.
Our earlier report on the August PCE inflation data explained that price growth came in softer than expected while consumer spending remained robust, a mix that tempered bets on another Federal Reserve rate hike. It also noted that methodology-driven revisions to prior inflation readings and shifting Treasury yields were influencing market sentiment and the perceived odds of an October move.
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