August 27, 2021
According to Bureau of Economic Analysis, personal income climbed $225.9 billion (1.1%) in July. Personal consumption expenditures (PCE) rose $42.2 billion (0.3%) but disposable personal income (DPI) increased $198.0 billion (1.1%).
In July, the real DPI rose 0.7%, but the real PCE fell 0.1%; goods fell 1.6%, while services rose 0.6%. The PCE price index grew by 0.4%. The PCE price index improved 0.3% excluding food and energy.
The rise in personal income in July was largely due to increases in government social benefits and employment remuneration. A rise in “other” social benefits within the government was somewhat offset by a drop in unemployment insurance, indicating a decrease in payments from the Pandemic Unemployment Compensation program.
In July, the $42.2 billion rise in PCE was largely attributable to a $102.6 billion increase in services spending and a $60.4 billion decrease in goods spending. Increases in all spending categories within services were widespread, with food services and accommodation leading the way. Most spending categories in goods experienced declines, led by motor vehicles and parts, recreational goods and vehicles, and clothing and footwear. These declines were countered in part by a rise in gasoline and other energy products.
In July, personal spending grew by $45.4 billion. Personal saving was $1.72 trillion in July, with a personal saving rate of 9.6% (personal saving as a proportion of disposable personal income.
The PCE price index climbed 4.2% in July compared to the previous year, showing rises in both goods and services (table 11). Energy prices rose by 23.6%, while food prices rose by 2.4%. Excluding food and energy, the PCE price index climbed 3.6% year on year in July.
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