Personal income increased by $71.7 billion in July, growing at a seasonally adjusted annual rate of 0.5%, according to the most recent data release from the Bureau of Economic Analysis. Personal consumption expenditure rose by 0.3%, after a 0.6% increase in June.
Disposable personal income – income remaining after deducting personal income taxes – continued its steady growth, and so did personal consumption expenditures. In July, disposable personal income grew at an annual rate of 2.7% and personal consumption expenditures grew 3.0% since last year.
In July, 5.7% of disposable income went to personal savings, an uptick from a revised savings rate of 5.5% in June. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. However, this process of deleveraging held back GDP growth due to reduced consumption.