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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

“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.”