U.S. Personal Income Unexpectedly Rises In July, Spending Continues To Spike
With employees returning to work as the economy continued to reopen, the Commerce Department released a report on Friday showing U.S. personal income unexpectedly increased in the month of July.
The report said personal income rose by 0.4 percent in July after slumping by 1.0 percent in June. The rebound surprised economists, who had expected income to dip by another 0.2 percent.
The Commerce Department said the unexpected uptick in personal income was more than accounted for by compensation of employees as portions of the economy continued to reopen
Proprietors’ income and rental income also contributed to the increase, while the growth was partly offset by decreases in government social benefits and income on assets.
Disposable personal income, or personal income less personal current taxes, edged up by 0.2 percent in July after tumbling 1.3 percent in June.
The report also showed a continued surge in personal spending, which jumped by 1.9 percent in July after spiking by 6.2 percent in the previous month. Economists had expected spending to increase by 1.5 percent.
“The 1.9% advance in July consumer spending offers yet another sign that while the demand recovery remains on track, it has settled into a slower pace,” said Lydia Boussour, Senior U.S. Economist at Oxford Economics.
She added, “Looking ahead, consumption should continue to firm as conditions very slowly normalize but the steep decline in federal support for unemployed workers and heightened uncertainty will depress consumer confidence and spending and weigh on the broader economic recovery.”
Excluding price changes, personal spending still surged up by 1.6 percent in July after soaring by 5.7 percent in June.
With spending jumping by much more than income, personal saving as a percentage of disposable personal income fell to 17.8 percent in July from 19.2 in June.
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