WASHINGTON — The most recent U.S. personal income report shows the economy continued to chug ahead into Q3, propelled by strong July wages.
July personal income posted a 0.4% increase, personal consumption expenditures grew 0.3%, and core PCE prices rose 0.1% for a 1.2% gain over the year. These are all favorable, as expected.
Private wages & salaries surged $32.7 billion after an $11.0 billion increase in June. Government wages continued to rise.
Supplements, proprietors' wages, rents, income on receipts, and transfers all gained as well. So the underlying data look good, though personal interest on bonds and savings advanced at a far slower pace than in the spring.
Real PCE posted a 0.2% rise in a good start to Q3, led by a rebound in durables spending as auto sales jumped. Real PCE is up 1.7% SAAR from Q2 but should rise further over the course of the quarter.
Savings jumped roughly $24 billion to the highest level since April, and the saving rate was 4.9%, also a high since spring.
Real disposable personal income at a 0.4% rise was the best since the winter. Taxes were higher, but the gain in income overwhelmed the effects of saving and taxation. This suggests the economy was poised for further growth before the markets melted down in August.
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