US Personal Income Rose 0.2% in August as Spending Surged 0.9%

American personal income climbed $66.6 billion, or 0.2 percent, in August, while consumer spending accelerated at a significantly faster pace, the U.S. Bureau of Economic Analysis reported. The gap between income and spending growth signals households drew on savings or credit to fund purchases during the month.

Personal consumption expenditures jumped $190.8 billion, a 0.9 percent monthly increase, driving total personal outlays — which also include interest payments and transfer payments — up $190.7 billion. The divergence between the 0.2 percent income gain and the 0.9 percent spending surge was among the sharpest single-month spreads in recent data releases.

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Disposable personal income, which strips out current taxes, rose $68.6 billion, or 0.3 percent, slightly outpacing gross income growth and suggesting a modest easing of the tax burden in the month. Even so, the faster pace of spending eroded the household buffer, leaving the personal saving rate at 4.1 percent — representing $990.2 billion in aggregate personal saving.

The PCE price data embedded in the BEA release serves as the Federal Reserve's preferred inflation gauge, making the monthly outlays report a closely watched input for monetary policy deliberations. A sustained decline in the saving rate could raise concerns among policymakers about the durability of consumer-led growth if income gains do not keep pace with expenditures.

Continue reading at U.S. Bureau of Economic Analysis.