Income declines, spending moderates in Aug.
Income declines, spending moderates in Aug. (by Greg Robb)
WASHINGTON (MarketWatch) - Personal income declined in August and consumer spending slowed, the Commerce Department reported Thursday. Personal income fell 0.1% in August, the largest decrease since October 2009. Consumer spending rose 0.2% in August after a 0.7% gain in July. Real consumer spending, adjusted for inflation, was flat. Economists were expecting a weak income and spending report in part because of the poor August nonfarm payroll report, which showed no net new jobs created and a decline in average hourly earnings, Wall Street economists had expected a flat reading for incomes and a 0.1% gain in spending. The savings rate fell to 4.5% from 4.7% in July. This is the smallest savings rate since November 2009. Wages and salaries fell 0.2% in August. Excluding inflation, real disposable incomes fell 0.3% in August, the biggest drop since November 2009. The Fed's favorite measure of inflation, the personal consumption expenditure price index, rose 0.2% in August compared with July and is up 2.9% in the past year. The core PCE rate rose 0.1% in August, weaker than the 0.2% gain forecast. The core PCE index is up 1.6% year-on-year.