Personal Income increased 0.4% in July, Spending increased 1.9%, Core PCE increased 0.3%

The BEA released the Personal Income and Outlays report for July:

Personal income increased $70.5 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.9 billion (0.2 percent) and personal consumption expenditures (PCE) increased $267.6 billion (1.9 percent).

Real DPI decreased 0.1 percent in July and Real PCE increased 1.6 percent. The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

The July PCE price index increased 1.0 percent year-over-year and the July PCE price index, excluding food and energy, increased 1.3 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through July 2020 (2012 dollars). Note that the y-axis doesn’t start at zero to better show the change.

Personal Consumption Expenditures Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

The increase in personal income and the increase in PCE were below expectations.

Even if PCE stayed at this level in August and September, PCE growth would be around 35% annualized compared to Q2 (since PCE was so low in April).   But PCE would still be far below the levels at the beginning of 2020.