Personal income climbed 0.2% in August after the downwardly revised 0.3% growth in July, according to the most recent data release from the Bureau of Economic Analysis. Wages and Salaries, the biggest share of personal income, registered a slight increase of 0.04% after strong gains in June and July. Personal consumption expenditures edged up by 0.1% in August. Adjusted for inflation, personal spending slipped 0.1%, the first decline since January 2017. However, on a year-over-year comparison, personal spending increased 2.5% in August.
Disposable personal income, income remaining after deducting personal income taxes, declined by 0.1% after accounting for inflation. Nevertheless, disposable personal income is 1.2 % higher than a year ago.
In August, 3.6% of disposable income went to personal savings. 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.