–Pvt Wages +$31.9b vs +$9.7b May; Core Prices +1.8% YOY
By Joseph Plocek
WASHINGTON (MNI) – The U.S. June Personal Income data add little to
the debate about the slow economy, as they were already incorporated
into Friday’s Q2 GDP report along with the results of annual revisions
to the data. However, they show pervasive weakness in spending at the
end of Q2 that might be carrying forward.
June Personal Income printed +0.5%, PCE flat, and core PCE prices
+0.2% for +1.8% over the year. Income was slightly better than
expectations but mostly went to savings, and spending was
correspondingly weaker than forecasts.
Private wages posted +$31.9 billion after an upwardly revised
+$9.7 billion in May as goods-producing payrolls rebounded. Income had
its largest gain since March as a result and real disposable personal
income was up 0.3%.
But savings jumped $51+ billion, or 12%, as spending stagnated.
This put the saving rate at 4.4%, its best since June 2011. Last year’s
similar pattern of summer savings were spent in the Christmas season;
whether the pattern repeats remains to be seen.
The saving rate appears to be on a broad downtrend since 2009 when
consumers were rebuilding their finances in the aftermath of the housing
meltdown. But it has reached 5%+ on a monthly basis in the last two
years, and thus still has room to spike.
Income supplements, rents, proprietors’ income, transfers and
income receipts all gained in June, supporting income. There was nothing
unusual in these sectors, although Social Security payments were up a
robust $7.8 billion after being flat in May.
The real PCE pattern is now +0.2% for April, +0.1% for May, and
-0.1% for June, illustrating a weakening over the course of the quarter
and setting up weakness into Q3. June’s real PCE breakdown also
was inauspicious: durables and services were flat and nondurables
printed -0.4%.
Slightly rising energy and food prices ahead should bolster
spending.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
