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Today’s data showed that personal income rose 0.3% in August. Wages and salaries posted the largest increase since January, but increasingly higher gas prices and other energy costs are commanding a larger share of consumer spending, explained analysts at Wells Fargo.  

Key Quotes:  

“Personal income increased 0.3% in August, which was a bit shy of the 0.4% that had been expected by the consensus. More than two thirds of the increase was due to the fact wages and salaries notched a solid 0.5% gain. That was the best monthly increase since January and the latest indication that the hot job market is at last translating into meaningful improvement in
wages.”

“Personal interest income, which comprises less than a tenth of overall income, was down for the second straight month and was in fact the only category of personal income that declined during the period.”

“Despite the slightly softer print on the income side, spending did not disappoint with the 0.3% pick-up in outlays, matching the consensus expectation. The fact that wages and salaries drove much of the increase explains why the saving rate was able to remain unchanged at 6.6%.”

“The takeaway is that higher energy prices in August might have been holding back spending in other categories. Excluding food and energy, spending was flat in August.”