Washington, June 27--Personal income rose in May as spending edged higher for a second month. Income growth outpaced spending, as consumers stashed more away and kept close watch on their purse strings.
Personal income rose 0.3% last month after a revised 0.2% rise in April, the Commerce Department said Friday.
Personal consumption edged up by 0.1% in May after also rising by a revised 0.1% a month earlier. April income was previously estimated as being flat while spending had been estimated as a 0.1% decline.
The personal-income gain came in as expected, while spending was slightly below the 0.2% forecast by economists.
Disposable income, or what is left after taxes, rose 0.3% in May after a 0.2% rise a month earlier. The nation's personal-savings rate, or savings as a percentage of after-tax income, rose to 3.5% from 3.4% in April.
A refinancing boom, stoked by low mortgage rates, along with solid home-value appreciation has helped consumers feel better about their own finances even as unemployment lingers at a nine-year high of 6.1%.
Spending on durable goods, manufactured items such as cars and appliances that are meant to last three years or more, was down 0.7% last month. That followed a 2.7% rise in that category in April. Spending on nondurable goods eased 0.1% after falling 1.3% in the previous month. Spending on services rose 0.5% after a 0.3% gain.
An inflation measure in the report continued to lose steam. Personal-consumption expenditures less volatile food and energy components rose at a 1.2% rate in May after climbing 1.3% in April and 1.5% in March. Fed policy makers have been concerned about the prospect of deflation, or broadly falling prices, and cut interest rates earlier in the week to help guard against that possibility.
