The BEA released brand new figures on personal income and spending in July this morning. They show that income growth nearly stopped in July, after a slow June. This is consistent with the other signs that we have of a summer slowdown in the economy. The graph below shows the 12-month percent change in disposable personal income since January of 2002.
The BEA report notes that personal spending continued to grow at a fast pace in July, however, primarily driven by auto sales. Together the income and spending data conspired to drive US households’ savings rate to one of its lowest levels of all time, as shown on the graph above. Consumers simply can not increase spending further without increased income. And for that we need the job market to improve.