WASHINGTON — The U.S. July personal income report was a little weaker than anticipated but still points to a turn-around to positive growth in the third quarter, largely reflecting big-ticket spending induced by government rebates.
July personal income was flat after a large 1.1% drop in June, personal consumption expenditures advanced 0.2%, and core PCE prices grew 0.1% for a 1.4% increase over the year. Real PCE was also up 0.2%, which indicates consumption will start the third quarter positive.
The Commerce Department said in a special note that the data included Cash for Clunkers, but PCE captured the discounted value and higher volume of auto sales. The program ran from July to Aug. 24, and most of the July rebates occurred in the last week of the month. Commerce adjusted its deflators to reflect this, and they might not line up with CPI data that reflect the average concessions during a 30-day period preceding the measurement deadline.
— Market News International
