Economy Watch: August Results for Personal Spending, Consumer Confidence
- Sep 02, 2014
Personal income nationwide increased $28.6 billion, or 0.2 percent in July compared with June, the Bureau of Economic Analysis reported on Friday. Disposable personal income, a crucial engine of the retail economy, increased $17.7 billion, or 0.1 percent, in July, compared with an increase of 0.5 percent in June.
By contrast, personal consumption expenditures decreased $13.6 billion in July, a 0.1 decline. Meanwhile, personal saving—reckoned as income less spending–was $739.1 billion in July, compared with $709.4 billion in June. That equates to a personal saving rate of 5.7 percent, compared to 5.4 percent in June.
When adjusted for price changes, personal consumption expenditures slipped 0.2 percent in July, in contrast to an increase of 0.2 percent in June. The Bureau of Economic Analysis calculated that prices increased 0.1 percent in July, compared with an increase of 0.2 percent in June. But when food and energy are taken out of the calculation, prices rose an identical 0.1 percent in both June and July.
Consumer Sentiment Strengthens
Consumers were feeling a bit more cheerful by the end of August than they were just a couple of weeks earlier, the University of Michigan and Reuters reported on Friday in their consumer sentiment index. Consumer sentiment ended the month at 82.5, compared with 79.2 in mid-August and 81.8 at the end of July.
Driving the gain in the University of Michigan-Reuters study was the current conditions component, which hit 99.8 at the end of August, up slightly from 99.6 at mid-month and considerably higher than the 97.4 reading at the end of July. That result was similar to the current conditions component of the Conference Board’s monthly report on consumer confidence, which was released earlier in the week.
On the other hand, Americans are more skeptical about their expectations for the future health of the economy. The University of Michigan-Reuters expectations component finished August at 71.3, up from 66.2 at mid-month, but down from 71.8 at the end of July.
Wall Street bounced around on Friday ahead of the Labor Day weekend, and ended positive, with the Dow Jones Industrial Average gaining 18.88 points, or 0.11 percent. The S&P 500 was up 0.33 percent and the Nasdaq advanced 0.5 percent.