EmailPersonal income and spending weakened in August. Income declined 0.1% after increasing a downwardly revised 0.1% (from 0.3%) in July. Spending slowed from a downwardly revised 0.7% (from 0.8%) increase in July to a 0.2% increase in August. The Briefing.com consensus expected personal income and spending to increase 0.1% and 0.2% respectively.
The fact that consumption growth remained positive during a time of falling income suggests that consumers are not as worried about the economy as their confidence levels suggest. The personal savings rate fell from 4.7% in July to 4.5% in August. If the confidence reports were valid, the savings rates should have increased, not decreased, during this time of uncertainty.
Goods and services spending each increased 0.2% in August, down from 1.0% and 0.6%, respectively, in July.
The modest gain in service consumption was unexpected. Restaurant expenditures and air conditioning usage both weakened over the last month. Normally, this would signal a contraction in services spending.
In terms of the overall economy, the data are mostly in-line with the advance retail sales report and will likely have only a minimal effect on our current GDP forecast.
