–Pvt Wages +$26.1b; Unemploy Extension Adds $20.6b Income;Savings 5.8%
By Joseph Plocek
WASHINGTON (MNI) – The August Personal Income report was slightly
better than expected, and should add to expectations that Q3 real growth
will come in at a better pace than the +1.7% reported for Q2.
August Personal Income printed +0.5% in its best gain since May
2009, Personal Consumption Expenditures printed +0.4%, and core PCE
prices printed +0.1% for +1.4% over the year. The latter shows still
subdued but non-negative inflation.
Private wages added $26.1 billion to income after +$25.7 billion in
July, but government wages fell $5.2 billion as states and localities
furloughed workers. The Census contributed just +$0.9 billion to wages
after +$2.5 billion in July as the counting programs wound down and
workers were let go.
Proprietors’ income, rents, and transfers gained. Federal transfers
were boosted $20.6 billion by the resumption of unemployment benefits
extensions. Unemployment benefits were reduced $17.1 billion in July
when the program was suspended, but this did not prevent spending from
rising at a similar pace to August.
Income receipts continue on a down-trend, at -$11 billion as market
rates remain low and deposits get rolled at ever-decreasing interest.
The savings rate was 5.8% after a downward-revised 5.7% in July.
Remarkably, this rate has been about double the prior 2006-08 average in
2009-10 as individuals reliquefy after the recession destroyed wealth.
Real PCE posted +0.2% for the month and the July-August average
stands +1.65% SAAR above Q2, pointing to Q3 real GDP at more than +2%.
So overall, this is a slightly better than expected report that is
consistent with further growth rather than double-dip.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
