According to the most recent data release from the Bureau of Economic Analysis (BEA), personal income remained virtually unchanged (-0.02%) since the last month. This is the first time that personal income failed to rise after a steady growth for 6 consecutive months. The BEA reported that the decrease in personal income in June primarily reflected decreases in personal dividend income and personal interest income while compensation of employees increased. Personal consumption expenditures barely changed, only inching up 0.06% in June. However, on a year-over-year comparison, personal consumption increased 4.3% in June.
Disposable personal income, income remaining after deducting personal income taxes, declined by 0.05% after accounting for inflation. This is the first decline in 2017. Nevertheless, disposable personal income is 0.93 % higher than a year ago.
The savings rate declined to 3.8%, as a result of flat income and a slight increase in spending. The savings rate declined sharply in November 2016, but was on an upward trend since then. 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.