Skip to content

Real Personal Spending Disappoints In July, Savings Rate Tumbles To Lowest Since Dec 2016

Following June’s MoM decline in incomes, Americans saw a modest 0.4% bounce in July (better than expected). However, their spending grew less than expected (up 0.3% MoM vs 0.4% expectations).

However, real personal spending rose just 0.2% MoM in July (below expectations).

This sent the US personal savings rate down to just 3.5%, the lowest since December 2016.

 

As Bloomberg notes, one bright spot was that wages and salaries rose 0.5 percent in July for a second month, the best back-to-back performance since the first two months of 2017.

However, both private and government wage growth is the weakest since Dec 2016.

While real disposable incomes gained, the saving rate dipped to the lowest this year. Faster pay growth would allow Americans to ramp up their spending while also socking away more cash for the future.

The data on prices showed inflation remains stubbornly below the Federal Reserve’s 2 percent goal. The central bank’s preferred inflation gauge has matched or topped policy makers’ target in just two months since 2012. While less convenient for the Fed, low price pressures help to boost consumer purchases.

Leave a Reply

Your email address will not be published. Required fields are marked *