Real Consumer Spending Increased 0.5% for July 2011

The BEA has released Personal Income and Outlays report for July. This report covers individual income, consumption and savings and was released earlier in the week. Personal consumption expenditures, called by the press consumer spending, increased 0.8% and in real dollars, increased 0.5% from June to July. Real Personal Consumption Expenditures, or PCE, are about 70% of GDP. Real means chained to 2005 dollars, or adjusted for inflation. Below is a graph of real PCE.



Consumer spending in real durable goods increased 2.0% for July. Graphed blow is the overall real PCE monthly percentage change:



The PCE price index increased 0.4% for the month, but minus energy and food increased 0.2%. The energy index increased 2.8% in July. This price index represents inflation, and is different from CPI. The price index is what is used to compute real consumer spending, or spending adjusted for inflation.

Personal income increased 0.3% in July. Below is personal income, not adjusted for inflation, or price changes.



Real personal income, or personal income adjusted for inflation, was unchanged. Below is the graph of real personal income. While personal income is everybody, all income in the U.S., we can see it's below pre-recession levels when adjusted for inflation.



Disposable income is what is left over after taxes. DPI or disposable income increased 0.3% for July, but adjusted for inflation, see the price indexes above, decreased -0.1%. This includes income of the uber-rich.



Below is real disposable income per capita. Per capita means evenly distributed per person and population increases every month. July mid-month the U.S. population was 312,665,000 and increased 225,000 from June.



Pretty flat monthly change huh? What sounds really good initially, an increase in personal income, when spread across increased population growth and adjusted for inflation shows it's often not great news. The numbers reported in the press headlines are aggregates. Aggregate means the total.

Wages and salaries, not adjusted for inflation, increased 0.4% at annualized rates, from last month. Annualized means what this month's increase would look like if it happened for an entire year. Last month's annualized rate was revised to a 0.1% increase.

Private wage and salary disbursements increased $24.3 billion in July, compared with an increase of $8.9 billion in June. Goods-producing industries' payrolls increased $3.7 billion, in contrast to a decrease of $0.3 billion; manufacturing payrolls increased $3.6 billion, in contrast to a decrease of $0.9 billion. Services-producing industries' payrolls increased $20.5 billion, compared with an increase of $9.2 billion. Government wage and salary disbursements decreased $0.1 billion in July.

Below are wages and salaries for the past decade. Notice the dip and the more flat line than earlier in the decade. Bear in mind these are aggregate, or all wages and salaries, and not adjusted for inflation.



Below is personal income minus personal current transfer receipts. This graph shows how much personal income increased that wasn't funded by the government and is used as a recession indicator. Transfer receipts are payments from the government to individuals where no actual services (work) was performed. This includes social security, unemployment insurance, welfare, veterans benefits, Medicaid, Medicare and so on. This month, in chained 2005 dollars, real personal income minus transfer receipts flat-lined, no increase in comparison to last month. Notice real personal income minus transfer receipts is below pre-recession levels.



The Personal Savings Rate was 5.0% in July. Personal savings is disposable income minus outlays, or consumption and not adjusted for inflation.




Below is disposable personal income minus personal consumption expenditures monthly raw total changes.



Personal Outlays are PCE, personal interest payments, and personal current transfer payments. PCE is defined above by percentages is almost all of personal outlays. Personal interest payments are things like the interest you pay on your credit card. Personal transfer payments are defined as:

Payments consisting of transfer payments by persons to government and to the rest of the world. Payments to government include donations, fees, and fines paid to Federal, state, and local governments, formerly classified as "personal nontax payments."

In other words, personal transfer payments are nothing more than that speeding ticket you just got or how you just donated to this site.

To visualize more data from this report, consider playing around with more of the St. Louis Federal Reserve Fred graphs.

Here is June's report overview, unrevised. The June revisions in this report are already incorporated into the Q2 GDP 2nd revision.

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