Economy Watch: Personal Income, Spending, Car Buying Rise; Weekly Jobs Report Flat
By Dees Stribling, Contributing Editor
While investors were anticipating Fed Chairman Ben Bernanke’s pronouncements from Jackson Hole, which wouldn’t be until Friday—or maybe even watching parts of the balloon-dropping festivities at the RNC—the Bureau of Economic Analysis reported on Thursday that personal income increased $42.3 billion, or 0.3 percent. Disposable personal income (the kind everyone wants) increased by $39.9 billion, or 0.3 percent, in July.
Despite reports of lost consumer confidence, people were out spending more, too. The BEA said that personal consumption expenditures (PCE) increased by $46 billion, or 0.4 percent. Real PCE—that is, PCE adjusted to remove price changes—was up 0.4 percent in July as well, a welcome uptick from June, when it decreased 0.1 percent.
Personal saving, which is disposable personal income less personal outlays, was down to $506.3 billion in July, compared with $516.2 billion in June. The personal saving rate saw a small downtick as well to 4.2 percent in July, compared with 4.3 percent in June.
Car Buying Picks up in August
One item that consumers are particularly eager to buy these days is a car. Automotive market specialist Edmunds.com forecasts that a little more than 1.287 million new cars will be sold nationwide in August for an annualized sales rate of 14.5 million light vehicles. If the numbers hold, August will be the second-best month of 2012 in terms of the annualized rate and the third-best month in terms of unit sales.
Edmunds.com estimates that August’s projected sales will be an 11.7 percent increase from July, and a 20.1 percent increase (unadjusted for number of selling days) from August 2011. Also, an estimated 3.1 million used cars will be sold in August, which represents an annualized rate of 36.9 million light vehicles. In July 3.2 million used cars were sold nationwide at annualized rate of 36.3 million.
“Sales showed signs of flattening out in the first couple months of summer, so August’s sales figures will come as a nice surprise for everyone in the auto industry,” Edmunds.com senior analyst Jessica Caldwell said in a statement. “Automakers and dealers have been very creative in packaging hidden incentives in recent weeks and when you combine that with the selldown of popular 2012 model year vehicles, there have been some nice deals available to car buyers.”
Weekly Jobs Report Flat
The job market is essentially treading water. During the the week ending August 25, the U.S. Department of Labor reports, initial unemployment claims were 374,000, exactly the same as for the previous week. The four-week moving average was 370,250 claims, an increase of 1,500 from the previous week’s revised average of 368,750.
After hemming and hawing all week, Wall Street decided to sell on Thursday. The Dow Jones Industrial Average dropped 106.77 points, or 0.81 percent, while the S&P 500 and the Nasdaq were down 0.78 percent and 1.05 percent, respectively.