Personal income climbed 0.3% in August after increasing by the same margin in July, according to the most recent data release from the Bureau of Economic Analysis (BEA). Wages and Salaries, the biggest component of personal income, registered an increase of 0.5%. Personal consumption expenditures edged up by 0.3% in August. Adjusted for inflation, real personal spending edged up 0.2% after climbing 0.3% in July. On a year-over-year comparison, real personal spending increased 3.0% in August.
Disposable personal income, income remaining after deducting personal income taxes, rose by 0.2% after accounting for inflation. Moreover, disposable personal income is 2.9 % higher than a year ago.
July data release showed that BEA made significant revisions to the real personal income category. The real personal income was revised upwardly to correct the previously underreported income, based on the new data from the IRS ‘National Research Program’. Therefore, the savings rate was revised upwardly. The revised series diverged noticeably from November 2016, when the previously published savings rate slipped to around 3.7%. The American households are saving much more than previously thought. The savings rate after 2016 stayed in the range of 6%- 7.5%, up from previously reported around 3%. In August, 6.6% of disposable income went to personal savings.