Personal Incomes, Spending Slow in May

Washington, DC, June 30–Personal spending was flat in May as personal income growth also slowed, according to an report from the Commerce Department.

Nominal incomes increased 0.2% in May as wages increased just 0.1%, the slowest gain since June 2004. In April, incomes rose a downwardly revised 0.6%, compared with a 0.7% increase originally recorded.

Nominal spending was unchanged in May, the weakest pace of spending since January.

Economists had expecting incomes to grow 0.4% and spending to increase 0.1%.

Inflation remained under control. Commerce Department data showed last month’s personal consumption expenditure price index as unchanged, with the core PCE index, which excludes food and energy, up 0.2%.

Personal taxes increased 0.6% after a 2% gain in April.

Spending on services increased 0.6%, but spending on durable goods plunged 1.8% and spending on nondurable goods fell 0.4%.

Spending is up 3.4% year-on-year.

The personal savings rate improved to 0.6% of disposable income from 0.5% in April, which was the lowest since October 2001.