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Personal income increased by 0.4% in December, following a 0.3% rise in November and a 0.7% gain in October, according to the latest data from the Bureau of Economic Analysis. The gains in personal income were largely driven by higher wages and salaries. However, the pace of personal income growth slowed from its peak monthly gain of 1.4% in January 2024.

Real disposable income, the amount remaining after adjusted for taxes and inflation, inched up 0.1% in December, matching November’s gain and following a 0.4% increase in October. On a year-over-year basis, real (inflation-adjusted) disposable income rose 2.4%, down from a 6.5% year-over-year peak recorded in June 2023.

Meanwhile, personal consumption expenditures rose 0.7% in December, building on a 0.6% increase in November and 0.5% in October. Real spending, adjusted to remove inflation, increased 0.4% in December, with expenditures on goods climbing 0.7% and spending on services up 0.3%.

As spending outpaced personal income growth, the personal savings rate dipped to 3.8% in December, down from 4.1% in November and 4.3% in October. With inflation eroding compensation gains, people are dipping into savings to support spending. This trend will ultimately lead to a slowing of consumer spending.

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Personal income increased by 0.3% in September, following a 0.2% up in August and a 0.3% increase in July, according to the most recent data release from the Bureau of Economic Analysis. The gains in personal income were largely driven by increases in wages, salaries, and personal current transfer receipts. However, the pace of personal income growth slowed from a peak monthly gain of 1.4% seen in January 2024.

Real disposable income, income remaining after adjusted for taxes and inflation, inched up 0.1% in September. On a year-over-year basis, real (inflation adjusted) disposable income rose 3.1%. The pace of real personal income growth softened from a 6.5% year-over-year peak in June 2023.

Personal consumption expenditures  rose 0.5% in September after a 0.3% increase in August. Real spending, adjusted to remove inflation, increased 0.4% in September, with spending on goods and services each climbing 0.5%.

While spending increased more than personal income, the personal savings rate dipped to 4.6% in September, down from 4.8% in August and 4.9% in July. As inflation has almost eliminated compensation gains, people are dipping into savings to support spending. This will ultimately lead to a slowing of consumer spending.

Discover more from Eye On Housing

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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