U.S. Personal Income and Outlay Both Increased in July 2021

The U.S. Bureau of Economic Analysis (BEA) reported on Friday (8-27-21) that according to their estimates, personal income (PI) increased $225.9 billion, or 1.1% in July. Disposable personal income (DPI) increased $198.0 billion, or 1.1%, and personal consumption expenditures (PCE) increased $42.2 billion, or 0.3%. Real DPI increased 0.7% in July and Real PCE decreased -0.1%; goods decreased -1.6%, but services increased 0.6%. The PCE price index increased 0.4%. Excluding food and energy, the PCE price index increased 0.3%.

The BEA indicates that the increase in personal income in July primarily reflected increases in government social benefits and compensation of employees. Within government social benefits, an increase in “other” social benefits (more than accounted for by advance Child Tax Credit payments as authorized by the American Rescue Plan) was partly offset by a decrease in unemployment insurance, reflecting a decrease in payments from the Pandemic Unemployment Compensation program. Within compensation, the increase was primarily in private wages and salaries, reflecting Bureau of Labor Statistics Current Employment Statistics.

Personal outlays increased $45.4 billion in July. Personal saving was $1.72 trillion in July and the personal saving rate — personal saving as a percentage of disposable personal income — was 9.6%. The PCE price index for July increased 4.2% from one year ago, reflecting increases in both goods and services. Energy prices increased 23.6% while food prices increased 2.4%. Excluding food and energy, the PCE price index for July increased 3.6% from one year ago.