U.S. Personal Income and Outlays – July 2017

Released Thursday, August 31, 2017

downloadsPersonal Income: +0.4% month-over-month (Cons: +0.3%), +2.7% year-over-year
Personal Consumption Expenditures: +0.3% month-over-month (Cons: +0.4%), +4.2% year-over-year
Core PCE Price Index: +0.1% month-over-month (Cons: +0.1%), +1.4% year-over-year
Savings Rate: 3.5%, -0.1 percentage point (ppt) month-over-month

Quick Take:
Personal income rose a healthy 0.4% in July compared to June. Personal income growth is up 2.7% year-over-year, however, as weak personal income data in October and November 2016 is weighing on the annual personal income growth calculation. Nominal personal income is up a stronger 3.5% at an annualized rate over the last six months, and solid wages and salaries growth appear to be supportive of continued healthy personal income growth in the future.

Nominal personal consumption rose 0.3% month-over-month in July after rising an upwardly revised 0.2% month-over-month in June. Nominal personal consumption was up 4.2% year-over-year as of July. Real personal consumption rose 0.2% month-over-month and was up 2.7% as of July. June Real PCE month-over-month growth was revised up which was also reflected in higher personal consumption within the Q2 GDP report that was released on Wednesday, August 30.

Regarding inflation, month-over-month growth for the core PCE price index remained subdued at 0.1% growth in July. Year-over-year growth decelerated slightly to 1.4% as of July, down from 1.9% as of February 2017. The deceleration is partly attributable to negative month-over-month growth in March due to a sharp decline in telecom services. We view the drag from telecom services as noise in an otherwise modestly inflationary environment.