Personal income climbed 0.4% in October, according to the most recent data release from the Bureau of Economic Analysis. Gains in personal income are largely driven by increases in wages and salaries and personal interest income. Personal consumption expenditures increased by 0.3% in October, compared to nearly 0.9% jump reported in September. Real spending, adjusted to remove inflation, inched up by just 0.1% after 0.5% increase in September.
Disposable personal income – income remaining after deducting personal income taxes – increased by 0.3% after accounting for inflation. It bounced back from a previous month decline and grew 1.6% since last year.
Personal savings increased to $457 billion in October. The saving rate rose to 3.2% after decreasing to 3.0% in September, the lowest rate since December 2007. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. This process of deleveraging held back GDP growth due to reduced consumption. The savings rate has been on a downward trend since 2016.