The Bureau of Economic Analysis just released the June data for personal income and outlays. It shows a mild uptick in both personal income and consumption.
Personal income increased $18.7 billion, or 0.1 percent, and disposable personal income (DPI) increased $16.3 billion, or 0.1 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $21.9 billion, or 0.2 percent. In May, personal income increased $23.2 billion, or 0.2 percent, DPI increased $17.6 billion, or 0.2 percent, and PCE increased $5.9 billion, or 0.1 percent, based on revised estimates.
Real disposable income increased 0.3 percent in June, in contrast to a decrease of less than 0.1 percent in May. Real PCE decreased less than 0.1 percent, compared with a decrease of 0.1 percent.
There are a lot of revisions here just like in the GDP data and I will crunch the numbers. But the headline is like it was for GDP:
Disposable personal income (DPI) (personal income less personal current taxes) was revised up $71.6 billion, or 0.7 percent, for 2008; was revised down $246.1 billion, or 2.2 percent, for 2009; and was revised down $195.0 billion, or 1.7 percent, for 2010.
The personal saving rate (personal saving as a percentage of DPI) was revised up from 4.1 percent to 5.4 percent for 2008, was revised down from 5.9 percent to 5.1 percent for 2009, and was revised down from 5.7 percent to 5.3 percent for 2010.
What does it mean that disposable income was revised down all three years, yet the savings rate was revised down in 2009 and 2010? I think it means that people were under debt stress trying to maintain lifestyles once the technical recovery formed. This was what I said in the last post on HSBC that I expect to occur going forward.
Notice that savings levels in the US are still well below their levels from the 1980s or 1990s. The question is whether easy money will create sustainable growth or depress savings rates. I say it is the latter.