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Analysts at Wells Fargo, point out that personal income rose solidly in June and noted that revisions to previously reported data show incomes rising a bit more rapidly and the saving rate doubled previous estimates.

Key Quotes:  

“The underlying data in June’s personal income report suggest there is still plenty of fuel in the tank of this long-running economic expansion. Personal income grew 0.4 percent in June, and consumer spending rose by a similar amount. Revisions to previously reported data showed that income was much stronger than had been previously reported and that consumption grew slightly less.”

“The personal income data paint a much brighter economic picture. Wages and salaries rose 0.4 percent in June and rose at a 4.4 percent annual rate during the second quarter. Wages and salaries rose at an even stronger 5.8 percent in the first quarter, led by double-digit growth in wages in manufacturing, mining and construction.”

“Consumer spending ended the second quarter on a strong note and is already up at a 1.6 percent annual rate in Q3 before we get any data for the quarter. Spending will still likely moderate from the prior quarter, however, which saw quite a bit of catch up from earlier this year.”

“Both the overall and core PCE deflator rose just 0.1 percent. On a year-to-year basis, the overall PCE deflator remains up 2.2 percent, while the core is up 1.9 percent. Neither is likely to raise any concern at today’s FOMC meeting, particularly with medium and long-term inflation expectations remaining so well contained.”