Monday , November 25 2024
Home / The Angry Bear / More modestly good fallout from lower gas prices

More modestly good fallout from lower gas prices

Summary:
July personal income and spending: more modestly good fallout from lower gas prices There was more good fallout from the recent decline in gas prices in today’s July report on personal income and spending. Personal income rose 0.2% for the month nominally, and nominal spending rose 0.1%. But because the relevant measure of inflation, the PCE deflator, declined -0.1%, real income rose 0.3% and real personal spending rose 0.2%. Meanwhile June’s income and spending numbers were revised higher and lower by 0.1% and -0.1%, respectively. This year I have been comparing both real personal income and spending with that with their level after early 2021’s round of stimulus as of May one year ago. Accordingly, the below graph is normed to 100 as of May

Topics:
NewDealdemocrat considers the following as important: ,

This could be interesting, too:

Joel Eissenberg writes Undocumented labor: solutions, not scapegoating

NewDealdemocrat writes October existing home sales: a pause, or possibly reversal, in the rebalancing trend

Angry Bear writes The Nation’s Dole for the Wealthy

Angry Bear writes The Pick to Be the “Champions of Public Health?”

July personal income and spending: more modestly good fallout from lower gas prices

There was more good fallout from the recent decline in gas prices in today’s July report on personal income and spending.

Personal income rose 0.2% for the month nominally, and nominal spending rose 0.1%. But because the relevant measure of inflation, the PCE deflator, declined -0.1%, real income rose 0.3% and real personal spending rose 0.2%. Meanwhile June’s income and spending numbers were revised higher and lower by 0.1% and -0.1%, respectively.

This year I have been comparing both real personal income and spending with that with their level after early 2021’s round of stimulus as of May one year ago. Accordingly, the below graph is normed to 100 as of May 2021:

More modestly good fallout from lower gas prices

Since then, real spending is up 2.5%, while real income has declined by -1.0%. 

Comparing real personal consumption expenditures with real retail sales since May 2021(essentially, both sides of the consumption coin) shows that both were a hair above being flat in July:

More modestly good fallout from lower gas prices

Finally, the personal saving rate was unchanged at 5.0%, tied with June for the lowest since right after the Great Recession in 2009 (note: below graph subtracts -5.0% to norm the current reading at zero):

More modestly good fallout from lower gas prices

This is the lowest since the end of the Great Recession. Only the ends of the 1990s boom and 2000s housing bubble were lower. 

Usually the savings rate tends to decrease as expansions grow longer, leaving consumers more vulnerable to shocks. Recent months have suggested that consumers have been digging deeper into their savings in order to deal with higher gas prices. Which isn’t entirely bad news, since recessions typically start when consumers get spooked enough to increase their savings rate. 

Instead, with gas prices having declined since June, consumers were probably a little more confident. This was a very modestly good report.

Leave a Reply

Your email address will not be published. Required fields are marked *