U.S. Personal Income And Spending Both Climb 0.4% In June

U.S. personal income and spending both increased in line with economist estimates in the month of June, according to a report released by the Commerce Department on Tuesday.

The report said personal income climbed by 0.4 percent in June, matching the increase seen in May as well as expectations.

Disposable personal income, or personal income less personal current taxes, also increased by 0.4 percent for the second consecutive month.

The Commerce Department said personal spending also rose by 0.4 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected spending to increase by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

Real spending, which is adjusted to remove price changes, climbed by 0.3 percent in June, matching the upwardly revised increase in May. Real spending in May was originally reported as unchanged.

Andrew Hunter, U.S. Economist at Capital Economics, said the increase in real spending was a little stronger than anticipated and provides a decent hand-off to the third quarter.

“Spending growth is still likely to slow to a more sustainable pace, particularly as the one-time boost from the tax cuts fades,” Hunter said. “But for now at least, that slowdown looks set to be fairly gradual.”

With income and spending rising at the same rate, personal saving as a percentage of disposable income was unchanged from the previous month at an upwardly revised 6.8 percent.

Hunter noted the savings rate for May was more than double the previous estimate due to comprehensive revisions to the national accounts released last week.

“This illustrates the pitfalls of relying too heavily on a volatile series like the savings rate, but it should also ease concerns about the sustainability of household finances,” he said.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth was unchanged at 1.9 percent.

by RTTNews Staff Writer

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