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U.S. Personal Income And Spending Growth Matches Economist Estimates

PersonalIncome 092713

Personal income and spending in the U.S. both rose in line with economist estimates in the month of August, according to a report released by the Commerce Department on Friday.

The report said personal income rose by 0.4 percent in August following an upwardly revised 0.2 percent increase in July. The acceleration in the pace of growth matched expectations.

The increase in personal income came as private wages and salaries climbed by $28.5 billion in August, in contrast to a decrease of $10.9 billion in July.

Supplements to wages and salaries increased by $3.8 billion in August after coming in unchanged in the previous month.

The Commerce Department also said disposable personal income, or personal income less personal current taxes, rose by 0.5 percent following a 0.3 percent increase in July.

Additionally, the report said personal spending increased by 0.3 percent in August after rising by an upwardly revised 0.2 percent in the previous month. The spending growth came in line with estimates.

Real spending, which is adjusted to remove price changes, increased by 0.2 percent in August after edging up by 0.1 percent in July.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The 0.2% m/m increase in U.S. real consumption in August suggests that consumption growth for the third quarter as a whole will be around 1.8% annualized, in line with the gain in the second quarter."

"As a result, it still appears that third-quarter real GDP growth will be between 2.0% and 2.5% annualized," he added. "The pick-up in income growth in August suggests that consumption growth may even accelerate in the fourth quarter."

With personal income rising faster than spending, personal saving as a percentage of disposable personal income climbed to 4.6 percent in August from 4.5 percent in July.

The Commerce Department also said its reading on core consumer prices, which exclude food and energy prices, increased at an annual rate of 1.2 percent in August.

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