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Personal Income and Spending in July Badly Miss Economist's Estimates

The personal income and spending report for July shows more unexpected weakness.
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Real (Inflation Adjusted) Income and Spending data from BEA, Chart by Mish

Real (Inflation Adjusted) Income and Spending data from BEA, Chart by Mish

The BEA's Personal Income and Outlays report for July 2022 was weaker than expected on both the spending and income side. The saving grace from a GDP standpoint was a reported month-over-month inflation rate of -0.1 percent.

Personal Income 

  • Personal income increased $47.0 billion (0.2 percent) in July, according to estimates released today by the Bureau of Economic Analysis. 
  • Disposable personal income (DPI) increased $37.6 billion (0.2 percent)
  • Personal consumption expenditures (PCE) increased $23.7 billion (0.1 percent).
  • The PCE price index decreased 0.1 percent. 
  • Excluding food and energy, the PCE price index increased 0.1 percent.
  • Real DPI increased 0.3 percent in July and real PCE increased 0.2 percent; goods increased 0.2 percent and services increased 0.2 percent.

Price Inflation Month-Over-Month

  • From the preceding month, the PCE price index for July decreased 0.1 percent. Prices for goods decreased 0.4 percent and prices for services increased 0.1 percent. 
  • Food prices increased 1.3 percent and energy prices decreased 4.8 percent. Excluding food and energy, the PCE price index increased 0.1 percent. 

Price Inflation Year-Over-Year

  • From the same month one year ago, the PCE price index for July increased 6.3 percent.
  • Prices for goods increased 9.5 percent and prices for services increased 4.6 percent.
  • Food prices increased 11.9 percent 
  • Energy prices increased 34.4 percent. 
  • Excluding food and energy, the PCE price index increased 4.6 percent from one year ago.

Economists Expectations

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  • The Bloomberg Econoday consensus estimate was for spending to rise 0.4 percent vs 0.1 percent actual.
  • The Bloomberg Econoday consensus estimate was for income  to rise 0.6 percent vs 0.2 percent actual.

These weak numbers will make a positive contribution to GDP because PCE inflation was a reported negative 0.1 percent.

Don't expect those negative inflation readings to last. The price of gasoline has leveled off but rent and electricity haven't.

For discussion, please see The Average US Household Pays 47 Percent More for Electricity Than a Year Ago

This post originated on MishTalk.Com.

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