The United States economy showed signs of modest improvement in June, with both personal incomes and consumer spending experiencing a 0.3% increase, according to detailed estimates released by the Bureau of Economic Analysis (BEA). This critical economic data provides a snapshot of consumer behavior and the broader US economy, indicating a slight upward trend after a period of fluctuation.
Personal incomes, a key indicator of economic health, saw a 0.3% rise on a monthly basis in June. This growth partially offset a 0.4% decrease recorded in May, suggesting a tentative recovery in household financial standing. Disposable personal income, which represents income after taxes, also mirrored this upward movement with a 0.3% gain, contrasting with a 0.5% slip in the preceding month.
Drilling down into the income components, compensation of employees, while growing, lagged the overall aggregate increase at 0.2%. This marked the smallest increase for the year, following two consecutive months of 0.4% growth in April and May. Wages themselves grew by a marginal 0.1% in June. When adjusted for inflation, the BEA reported that “real” disposable incomes remained flat in June, after experiencing a notable 0.7% decline in May, highlighting the persistent impact of higher prices on purchasing power.
Personal Consumption Expenditures (PCE), a comprehensive measure of consumer spending across the US economy, also expanded by 0.3% in June, aligning with the growth rate of disposable income. This increase was driven by a 0.7% surge in nondurable goods, while purchases of durable goods remained static after seasonal adjustments. Expenditure on services saw a consistent 0.3% increase during the month.
Looking at the broader trend, when the effects of inflation are discounted, personal consumption expenditures have risen by 2.1% over the last 12 months. This growth rate surpasses the equivalent 1.7% increase in real disposable income, suggesting that consumers are spending more relative to their real income gains. Both trends, however, have shown signs of deceleration as the year has progressed, indicating a cautious approach to financial activity.
The PCE price index, which is the Federal Reserve’s preferred measure of inflation, increased by 0.3% in June and recorded a 2.6% rise on a 12-month basis. This marked an acceleration from the 2.4% seen in May and 2.2% in April. Notably, durable goods experienced a 0.9% year-long increase, a significant shift from previous months. Excluding volatile food and energy components, the core PCE price index increased 0.3% in June and 2.8% year-over-year.
These detailed figures on consumer spending and personal income contribute to a clearer picture of the nation’s economic trajectory. The latest economic data, including the pickup in exports and a drop in imports, played a significant role in real gross domestic product (GDP) returning to growth in the second quarter. This comprehensive analysis from the Bureau of Economic Analysis is vital for understanding current market dynamics and future economic projections.
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