Personal Income Up Marginally, but Inflation Continues to Eat into Personal Savings

Washington, D.C., July 29, 2024--Personal income inched up 0.2% in June, down from a 0.4% increase in the prior month, according to the most recent data release from the Bureau of Economic Analysis.

Gains in personal income are largely driven by increases in wages and salaries, the National Association of Home Builders (NAHB) notes in its analysis of the findings. As spending outpaced personal income growth, the personal savings rate decreased to 3.4%, the report states. This reading is less than half of the 7.4% average rate seen in 2019 before the COVID-19 pandemic, notes NAHB.

"As inflation has mostly eliminated real compensation gains, consumers are dipping into savings to support spending," the analysis reads. "This will ultimately lead to a slowing of consumer spending."

Real disposable income (income remaining after adjusted for taxes and inflation) edged up 0.1% in June, down from an increase of 0.3% in May. On a year-over-year basis, real disposable income rose 1%. The pace of real personal income growth slowed after reaching 5.3% year-over-year gain in June 2023.

Personal consumption expenditures rose 0.3% in June after a 0.4% increase in May. Real spending, adjusted to remove inflation, increased 0.2% in June, with spending on goods rising 0.1% and spending on services up 0.4%.