The Bureau of Economic Analysis reported that personal spending increased 0.1 percent in August, slowing from a gain of 0.3 percent in July. Nondurable goods spending rose 0.3 percent for the month, but that was offset by a 1.1 percent decline in durable goods, especially for motor vehicles. Despite the mixed results in the latest data, Americans have continued to spend at relatively healthy rates overall. Indeed, personal spending has increased 3.9 percent over the past 12 months. Breaking that figure down, spending on durable and nondurable goods has risen 3.5 percent and 3.1 percent year-over-year, respectively. For its part, the saving rate was unchanged at 3.6 percent in August, and it continued to indicate accelerated spending, down from a saving rate of 4.9 percent one year ago.
Meanwhile, personal incomes rose 0.2 percent in August, easing a bit from the 0.3 percent increase in July. Over the past 12 months, personal incomes have risen 2.8 percent, up from 2.6 percent in July. In addition, manufacturing wages and salaries grew 1.5 percent from $823.9 billion in August 2016 to $835.9 billion in this report.
In other news, the personal consumption expenditure (PCE) deflator increased 0.2 percent in August, a four-month high. After seeing pricing pressures accelerate strongly earlier this year—with the PCE deflator peaking at 2.2 percent year-over-year in February—inflation has pulled back since then. Since August 2016, the PCE deflator has increased 1.4 percent, matching June and July’s rates. Similarly, excluding food and energy, core inflation increased 0.1 percent in August, or 1.3 percent year-over-year, a rate not seen since November 2015.