Personal income rises less than expected in August, prices rise more

Personal income increased $35.5 billion (0.2 percent) in August according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $18.9 billion (0.1 percent) and personal consumption expenditures (PCE) increased $130.5 billion (0.8 percent).

Real DPI decreased 0.3 percent in August and Real PCE increased 0.4 percent; goods increased 0.6 percent and services increased 0.3 percent (tables 5 and 7). The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

The increase in personal income in August primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase primarily reflected an increase in private wages and salaries. Within government social benefits, an increase in "other" social benefits, reflecting advance Child Tax Credit payments authorized by the American Rescue Plan, was partly offset by a decrease in unemployment insurance, reflecting decreases in payments from the Pandemic Unemployment Compensation program.

The $130.5 billion increase in current dollar PCE in August reflected an increase of $66.0 billion in spending for goods and a $64.6 billion increase in spending for services (table 3). Within goods, increases in spending for food and beverages as well as “other” nondurable goods (mainly, household supplies as well as recreational items) were partly offset by a decrease in spending for motor vehicles and parts. Within services, the increases were widespread, led by “other” services (mainly, personal care and clothing services), housing and utilities, and health care.

Personal outlays increased $132.6 billion in August. Personal saving was $1.71 trillion in August and the personal saving rate—personal saving as a percentage of disposable personal income—was 9.4 percent.

The PCE price index for August increased 4.3 percent from one year ago, reflecting increases in both goods and services. Energy prices increased 24.9 percent and food prices increased 2.8 percent. Excluding food and energy, the PCE price index for August increased 3.6 percent from one year ago.