Personal Income, Wages, Salaries, Savings Advanced in July

Personal Income, Wages, Salaries, Savings Advanced in July

Personal Income, Wages, Salaries, Savings Advanced in July


US consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Federal Reserve to raise interest rates this year.

The Commerce Department said Monday that consumer spending, which accounts for more than 67% of US economic activity, rose 0.3% last month after a 0.5% gain in June.

July’s increase was in line with economists’ expectations. When adjusted for inflation, consumer spending also rose 0.3% in July after advancing 0.4% in June.

Consumer spending appears to have retained some of its momentum from the second quarter, when it grew at a 4.4% annual rate, the fastest in nearly 2 years. That jump helped to mitigate some of the impact of a sharp inventory drop and prolonged business investment downturn.

The economy grew at a lackluster 1.1% annual rate in Q-2.

US stock futures rose after Monday’s data, while prices for US Treasuries held earlier gains. The USD was trading higher against a basket of currencies.

July’s consumer spending data added to reports on the goods trade deficit, industrial production, durable goods orders and residential construction that have pointed to an acceleration in economic growth early in Q-3.

The Atlanta Fed is currently estimating Q-3 GDP growth rising at a 3.4% annual pace.

Consumer spending is being driven by a tightening labor market, which is steadily lifting wages. Rising home values and stock market prices, which are boosting household wealth, are also supporting consumption.

US Fed Chairwoman Janet Yellen told a gathering of global central bankers Friday in Jackson Hole that she believed the case for raising interest rates had been strengthened in recent months by the “solid performance of the labor market and our outlook for economic activity and inflation.”

Last month, there was little sign of inflation pressures even as consumer spending firmed.

The PCE (personal consumption expenditures) price index, excluding the volatile food and energy components, edged up 0.1% after a similar gain in June.

In the 12 months through July the core PCE increased 1.6%. It has risen by the same margin every month since March. The core PCE is the Fed’s preferred inflation measure and is running below its 2% target.

Consumer spending last month was lifted by a 1.6% ris in purchases of long-lasting manufactured goods such as automobiles. Spending on services rose 0.4%, but outlays on non-durable goods slipped 0.5%.

Personal income increased 0.4% in July after rising 0.3% in June. Wages and salaries advanced 0.5%. Savings rose to $794.7-B from $776.2-B in June.

Monday, the major US stock indexes finished at: DJIA +107.59 at 18502.99, NAS Comp +13.41 at 5232.33, S&P 500 +11.34 at 2180.38

Volume: Trade was lighter than the resent average with 646-M/shares on the NYSE.

  • Russell 2000 +9.5% YTD
  • S&P 500 +6.7% YTD
  • DJIA +6.2% YTD
  • NAS Comp +4.5% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.32) Neutral (-0.09) Bullish (0.48) Very Bullish (0.58)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.33) Neutral (0.12) Bullish (0.44) Bullish (0.42)
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.35) Bullish (0.30) Bullish (0.42) Bullish (0.33)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Very Bearish (-0.51) Bearish (-0.33) Bearish (-0.49) Very Bearish (-0.71)

Stay tuned…


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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