Personal Income Weaker Than Expected, Spending In-Line

Personal income fell -0.7% in July, well below the consensus estimate of -0.2% and down from 0.1% the previous month. Personal spending matched consensus at 0.2%, down from 0.6% in June.

According to the Bureau of Economic Analysis, rebate checks continued to play a role in spending and income:

In April, May, June, and July, changes in disposable personal income (DPI) -- personal<br />income less personal current taxes -- were affected by the Economic Stimulus Act of 2008.  The<br />federal government issued rebate payments of $1.9 billion in April ($23.3 billion at an annual<br />rate), of $48.1 billion in May ($577.1 billion at an annual rate), of $27.9 billion in June ($334.4<br />billion at an annual rate), and of $13.7 billion in July ($164.1 billion at an annual rate).  These<br />rebates increased government social benefit payments and reduced personal current taxes.  The<br />rebates boosted the change in DPI $23.3 billion in April and $553.8 billion in May, and reduced<br />the change in DPI by $242.7 billion in June and by $170.3 billion in July.  Excluding these rebate<br />payments, which are discussed more fully below, DPI increased $55.6 billion, or 0.5 percent, in<br />July, increased $34.7 billion, or 0.3 percent, in June, and increased $42.1 billion, or 0.4 percent,<br />in May.<br />

Graph courtesy of

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