–Real PCE Rises 0.4% In July, Up 1.4% SAAR From Second Quarter Average
–PCE Price Index Flat, Core Flat; Total Prices +1.3% Y/Y, Core +1.6%

By Kevin Kastner

WASHINGTON (MNI) – Personal income and spending rose as expected in
July, but the year/year rate of price increases continued to slow, data
released by the Commerce Department Thursday morning showed.

Personal income rose 0.3%, as expected in an MNI survey of
economists. There were gains reported in every major income category
except a 0.5% decline in interest income. Wages and salaries rose 0.2%
in the month following a 0.4% rise in June.

Disposable personal income rose 0.3% in the month, both before and
after adjustment for price changes.

The saving rate fell slightly to 4.2% in July from 4.3% in June.

Current dollar personal consumption expenditures rose 0.4% in July,
as expected, after holding steady in June. Spending on durable goods
jumped 0.8% in the month, likely due to a rebound in motor vehicle.
Nondurable goods spending was up 0.6% after three straight declines and
services spending rose 0.3%.

Real PCE rose 0.4% in July, after falling 0.1% in June. The real
PCE rate of growth was the same as current dollar PCE due to a flat
reading for the PCE price index.

There was a similar pattern of contributions for real PCE as there
was for nominal PCE, with a 1.1% surge in durable goods PCE adding to a
0.5% rise in nondurable goods PCE and a 0.3% rise in services PCE.

Real PCE was up 1.4% in July at an annual rate from the second
quarter average, according to an MNI calculation. Real PCE rose at a
1.7% annual rate in the second quarter, according to data released on
Wednesday.

The PCE price index was flat in July after a 0.1% rise in June, and
was up 1.3% year/year, a modest slowdown from the 1.5% year/year rate in
June and a continuation of the downward trend.

The core price index was also flat in July following a 0.2% June
increase, slightly below expectations for a 0.1% rise. The July index
was up 1.6% from July 2011, a slower rate than the 1.8% year/year rise
in June.

The core PCE price index was up 0.8% at an annual rate from the
second quarter average. The core PCE price index was reported up 1.8% in
the second quarter GDP data released Wednesday.

** MNI Washington Bureau: 202-371-2121 **

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