Personal Income, Spending Surge in August

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It would seem that this “Surge” in income and spending could mainly be attributed to the fact that a lot of people had 5 paydays (Fridays) in August as opposed to 4 in July. This works out to, for those people that get paid on Fridays, a 20% boost in take home income for the month. Please read the article below.

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Personal income grew in August at its fastest pace since February and consumer spending grew faster than in July, the Bureau of Economic Analysis reported Friday. The growth matched economists’ forecasts of a 0.4 percent boost in income and a 0.3 percent increase in spending.BEA also revised up its estimate of both spending and income growth in July.

The report suggested strong growth in spending for the third quarter ending Monday, which would boost GDP. In the first two months of the second quarter – during which the economy grew at a seasonally adjusted annual rate of 2.5 percent – consumer outlays were essentially flat, dropping 0.2 percent in April and then increasing by the same amount in May. Spending rose 0.6 percent in June, contributing to the GDP growth.

Total employee compensation, which had fallen 0.2 percent in July, rose .04 percent or $34.2 billion in August. Wages rose an aggregate 0.4 percent or $30.4 billion in August after dropping $18.5 million. The calendar often affects wage and government transfer payments. There were four Fridays, traditional paydays, in July but five in August.

Farm income, which had struggled earlier the year due to droughts and flooding in different parts of the country, rose $7.9 billion or 6.8 percent in August, the second straight month of income growth after falling in April, May and June.

Government transfer payments – essentially Social Security and Medicare (along with a few other categories) – rose a collective 0.4 percent or $10.8 billion in August.

To read the complete article please use the link below.

Personal Income

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