Economy Watch: Personal Income, Spending Up in July; Serious Mortgage Delinquencies, Consumer Sentiment Down
- Sep 03, 2013
The Bureau of Economic Analysis reported on Friday that personal income edged up in July by $14.1 billion, or 0.1 percent. Personal consumption expenditures—known as PCE, meaning people taking that income and buying things–increased $16.3 billion, or also 0.1 percent, for the month.
Factor in inflation (price increases, in this case)—which is low but still an ongoing economic reality—and real PCE increased less than 0.1 percent in July, compared with growth of 0.2 percent in June, according to the BEA. The bureau’s price index for PCE increased 0.1 percent in July, compared with an increase of 0.4 percent in June. Take food and energy out of the calculations, and the price index increased 0.1 percent in July, compared with an increase of 0.2 percent the month before.
Though the monthly increase in real PCE wasn’t very strong in July, this particular metric of the recovery has been increasing steadily since early 2010. By late 2010, real PCE was roughly where it had been in 2007 and early ’08, just short of an annualized rate of $10.1 trillion. In July 2013, the annualized rate was roughly $10.7 percent (the preceding figures are in 2009 dollars), so consumer spending has—in parallel with the housing recovery—been creeping upward.
Serious Mortgage Delinquencies Continue to Drop
Fannie Mae reported on Friday that the single-family serious delinquency rate for mortgages that it owns or insures declined in July to 2.7 percent from 2.77 percent in June. According to the GSE, a mortgage is seriously delinquent when it’s more than 90 past due, or in the foreclosure process.
The Fannie Mae serious delinquency rate is down from 3.5 percent in July 2012, and the current rate is the lowest since December 2008. Serious delinquencies have fallen 0.8 percentage points over the last year, and if the rate continues to fall at that that pace, it will be less than 1 percent sometime in 2015. Even in healthy economic times, 1 percent is considered normal.
Earlier in the week, Freddie Mac said that its single-family delinquency rate dropped from 2.79 percent in June to 2.7 percent in July. Freddie’s rate was 3.42 percent in July 2012, and the current rate is the lowest since April 2009.
Consumer Sentiment Edges Down
The final Reuters/University of Michigan consumer sentiment index for August come in at 82.1, according to the university on Friday. That’s down from the final July reading of 85.1, but up from the preliminary mid-August reading of 80.0. Consumers are a little jittery, it seems, but not excessively so.
Wall Street turned nervous again on Friday ahead of the Labor Day weekend, perhaps dwelling on the prospect of U.S. military action, driving the Dow Jones Industrial Average down by 30.64 points, or 0.21 percent. The S&P 500 was off 0.32 percent and the Nasdaq declined 0.84 percent.