June 2019 Personal Income and Outlays
Submitted by Atlas Indicators Investment Advisors on August 13th, 2019
Earning and spending increased in aggregate during June 2019 according to the Bureau of Labor Statistics. Their Personal Incomes and Outlays report shows pay rose 0.4 percent, and after-tax pay (aka disposable income) gained 0.4 percent as well. Spending was up 0.3 percent, rising for a fourth consecutive month. Personal savings edged higher as well, moving up to 8.1 percent from 8.0 percent in May.
All major categories of income improved. Wages and salaries (the largest source of income for Americans) moved up 0.5 percent. Likewise, proprietors’ income increased 0.4 percent and has been up in every month after March. Rental incomes rose 0.6 percent and haven’t decreased since December 2018. Personal income on assets (dividends and interest) rose 0.3 percent as interest was up 0.5 percent and dividends were unchanged.
Outlays were universally higher as well. Spending on goods increased 0.3 percent with outlays for durable goods and nondurable goods rising 0.4 percent and 0.2 percent respectively. Finally, Americans spent 0.3 percent more on services in the period.
Important inflation data are also contained in this release. The personal consumption expenditures (PCE) price index moved up 0.1 percent. The core PCE price index moved up even faster, rising 0.2 percent and matching the gain in each of the prior two periods. Year-over-year, the core PCE price index is up 1.6 percent, and remains well below the Federal Reserves target of 2.0 percent.
As we mentioned in yesterday’s note on gross domestic product (click here), our economy’s growth is leaning heavily on consumers right now as business investment growth is weak. As long as this indicator’s components continue improving the virtuous portion of this business cycle is likely to continue. However, firms will need to step up if the spending fatigue sets in. For now, this expansion is unlikely to end soon, but the American economy is not firing on all cylinders.