Personal income increased 0.4% in July after showing virtually no change in the previous month, according to the most recent data release from the Bureau of Economic Analysis (BEA). This is the fastest growth since February 2017, as the wages and salaries maintained solid growth of 0.5% in July. Personal consumption expenditure rose by 0.3%, following upwardly revised 0.2% growth in June. Moreover, on a year-over-year comparison, personal consumption increased 4.6% in July.
Disposable personal income – income remaining after deducting personal income taxes – increased by 0.3% after accounting for inflation. The growth of disposable personal income bounced back from a previous month decline and grew 1.3% since last year.
In July, 3.5% of disposable income went to personal savings, a slight decrease from a revised savings rate of 3.6% 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. The savings rate slipped to 3.7% in November 2016 from around 5% in previous months.