Personal Income Outgrows Spending, Savings on the Rise

Personal consumption expenditures were up by $37.4 billion, or 0.3%, in July. Bloomberg was calling for this to be up by 0.4% as well.

The recent general trend of income outpacing spending continues. In June’s revisions, personal income was up $59.4 billion, or 0.4%; disposable personal income was up $52.4 billion, or 0.4%; and personal spending was up by $31.8 billion, or 0.3%.

The price index showed that there was a mere 0.1% gain, right in line with expectations.

To address the difference in income versus spending, the BEA shows the personal savings rate. This is the disposable personal income minus the personal spending. This was $651.1 billion in July, up from $627.3 billion in June. The personal saving rate as a percentage of disposable personal income was 4.9% in July, compared to 4.7% in June.

Hopefully that cash from savings went into buying stocks on Monday or Tuesday before the pullback vanished. If not, it should be going somewhere other than under a mattress or sitting in a zero-interest checking account.

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