American incomes rose more slowly last month, but for once those gains weren’t swallowed up by rising prices.
After-tax personal income increased by 0.2% in July. said on fridayThis was slower than June’s 0.7% rise. But while June’s gains were offset by a surge in prices, Americans’ inflation-adjusted income rose 0.3% in July as lower gas prices put inflation on hold.
Private consumption also cooled in July as Americans refrained from purchasing goods. Overall consumer spending rose 0.1% from his 1% gain in June.
Economists warn that the reprieve from inflation could be temporary. But they say households should be able to keep spending as long as employers keep hiring and wages keep rising. The Labor Department will provide data on his August employment and wages next weekend.
Diane Swonk, chief economist at accounting firm KPMG, said the strength of the consumer economy reflects a handover from the government to the private sector, which helped households and businesses with record spending early in the pandemic. Stated. For the past year and a half.
“We have seen the private sector really pick up that baton, which is amazing,” she said.
Inflation-adjusted income and expenses are in the index Economists at the National Bureau of Economic Research use it to determine when a recession started. The rise in July is the latest evidence that the economy is slowing but not in recession.