U.S. Personal Income and Outlays – July 2018

Released Thursday, August 30, 2018

Download PDF version herePersonal Income: +0.3% month-over-month (Cons: +0.4%), +4.7% year-over-year
Personal Consumption Expenditures: +0.4% month-over-month (Cons: +0.4%), +5.2% year-over-year
Core PCE Price Index: +0.2% month-over-month (Cons: +0.2%), +2.0% year-over-year
Savings Rate: 6.7%, unchanged year-over-year

Quick Take:
Personal income rose +0.3% month-over-month in July, slightly below economists’ estimates. Year-over-year personal income growth was +4.7%, down from +4.8% growth in June. Wages and salaries, which make up ≈50% of personal income, grew +4.7% year-over-year in July, down from +4.9% growth in June.

Nominal personal consumption rose +0.4% month-over-month in July, in line with economists’ expectations. Nominal personal consumption growth in July was driven by services and nondurable goods spending, both of which rose +0.4% month-over-month, respectively.

July’s personal income and spending data suggests the U.S. consumption picture remains on solid footing. Year-over-year personal consumption growth reached the highest level in almost four years, and while the recent acceleration in growth has been driven primarily by food services and gasoline consumption, overall strength remains broad based, with both goods and services spending growing at over +5.0% year-over-year.

On the inflation side, month-over-month growth for the core PCE price index was +0.2% in July. Year-over-year growth was +2.0%, the highest pace of growth since April 2012. The housing category continues to be a large contributor to overall inflation, as housing and utilities prices were up +3.1% year-over-year as of July.

Notable Data:
Real disposable income, an indicator of purchasing power, was up +0.2% month-over-month in July and rose +2.9% year-over-year, down from +3.0% growth in June. On a 6-month annualized basis, real disposable income was up +2.6% in July.

Services spending, which makes up approximately two-thirds of personal spending, rose +5.2% year-over-year in July, the highest pace of growth since December 2016.

Real personal consumption rose +0.2% month-over-month in July after rising +0.3% for three consecutive months. On a year-over-year basis, real personal consumption rose +2.8%, up from +2.7% in June.