BEA: July personal income up $115.1bn; PCE up 0.2% and saving rate 3.0%

BEA estimates show that personal income increased by $115.1 billion in July, equivalent to 0.4% at a monthly rate. Disposable personal income rose by $125.9 billion (0.5% monthly), after personal current taxes are taken into account.

The consumption side was more modest: personal consumption expenditures increased $36.3 billion (0.2%). Personal outlays, which include PCE plus personal interest payments and personal current transfer payments, rose $36.6 billion in July. BEA also reported personal saving of $712.0 billion, with the personal saving rate—personal saving as a percentage of disposable personal income—at 3.0%.

For FX traders, the usefulness lies in the implied balance between income growth and spending/saving. With income rising faster than PCE in dollar terms, the data can be read as consumers having some capacity to sustain demand, but the relatively low saving rate suggests that consumption is still being supported without large buffers being built.

The next items to watch are whether PCE continues to track income growth, and whether the saving rate changes in the same direction as real-time consumer purchasing power. Together, these will help frame the demand impulse and the likely persistence of consumption pressures in subsequent releases.