The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income rose slightly by 0.3% on a month-over-month basis in September after a 0.5% increase in August. The 0.3% gains in personal income, which is at a seasonally adjusted annual rate (SAAR) of $50.2 billion, were largely limited to personal interest income, farm proprietors’ income, and government social benefits to persons. However, wages and salaries stayed flat, mostly as a result of the United Auto Workers work stoppage, which pulled the wages and salaries estimates down by $1.6 billion (SAAR) in September.
Year over year, personal income increased by 4.9%. Real disposable income, income remaining after adjusting for taxes and inflation, inched up 0. 3% in September after a 0.5% gain in August.
Personal consumption expenditures (PCE), which make up more than two-thirds of the economy, increased 0.2% in September, the same margin as in August. Spending growth slightly softened compared to earlier months of this year.
Personal savings increased to $1,384 billion (SAAR) in September, accounting for 8.3% of disposable income. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. However, higher savings rates, which imply a slowdown in spending, could hold back the growth of economy.