Modest Growth in Personal Income in May, But Spending is Unchanged
Americans experienced a 0.3 percent increase in personal income and a 0.2 percent gain in disposable income in May, according to numbers released this morning from the Bureau of Economic Analysis. Consumer spending, though, was virtually unchanged from April, suggesting that slow job growth and increased prices are having an impact despite the higher incomes.
Consumers purchased $17.5 billion fewer durable goods and $8.2 billion fewer nondurable goods in May, down 1.5 percent and 0.3 percent, respectively. Real consumer spending fell 0.1 percent, much as it did the previous month.
Manufacturing wages and salaries rose by $2.9 billion, or 0.4 percent, in May after being unchanged in April. This continues a longer trend of manufacturing compensation inching up, with year-to-date wages and salaries up 2.4 percent.
Prices for consumer items were up 0.2 percent in May, with the core inflation rate – which excludes food and energy – rising 0.3 percent. Consumer prices are 2.5 percent higher than in May 2010, and the year-over-year core inflation rate stands at 1.2 percent. Core inflation, while low, has steadily risen over the past few months. Energy costs fell in the month of May, reflecting lower recent gasoline prices, but food costs continued to rise.
The personal savings rate now stands at 5 percent, up slightly from April’s reading of 4.9 percent but below the 5.4 percent rate of December 2010.
Chad Moutray is chief economist, National Association of Manufacturers.