Consumer Spending Down 0.1% in August, First Decline Since Katrina

The Commerce Department reported that consumer spending, after adjusting for inflation, dropped by 0.1% in August, the first decline since a 0.3% fall in September 2005 due to Hurricane Katrina. A downturn in purchases of motor vehicles and parts more than accounted for the downturn in real consumer spending in August and most of the increase in July.

Personal incomes, a broad measure that includes all sources of income, rose by just 0.3 percent in August, after rising 0.5 percent in July, the weakest performance in nine months. Core inflation, which excludes energy and food, was up 2.5% compared to a year ago, the biggest year-over-year increase in more than a decade

Private wage and salary disbursements increased $2.5 billion in August, compared with an increase of $30.3 billion in July.

Personal consumption expenditures (PCE) increased $10.5 billion, or 0.1 percent. Personal outlays -- PCE, personal interest payments, and personal current transfer payments increased $13.7 billion in August, compared with an increase of $78.3 billion in July. PCE increased $10.5 billion, compared with an increase of $75.9 billion.

Personal saving -- DPI less personal outlays -- was a negative $45.0 billion in August, compared with a negative $70.1 billion in July. Personal saving as a percentage of disposable personal income was a negative 0.5 percent in August, compared with a negative 0.7 percent in July.

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