skip navigation

By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

July Personal Incomes Point to at Best Steady Consumption Growth

The Bureau of Economic Analysis (BEA) today released estimates of personal income and consumer spending for July. Within that report, we pay closest attention to private-sector wage and salary income and disposable personal income. Both measures rose 0.5% in July. Both also saw modest downward revisions to June growth and slight upward revisions to growth over January-May.

The data are summarized in the chart. For now, at least, July gains were enough to stem a downtrend in income growth that emerged in late-2014. However, as seen there, private wage incomes show only 2.8% growth over the last six months, while disposable incomes have grown at a 3.9% rate—both measures up from even lower rates through June. In 2014, disposable income grew more slowly than wage income because of expiring benefit income for those workers finding jobs. The recent pick-up in disposable income growth relative to wage income reflects stepped-up benefits for Medicare and Medicaid.

Remember that this is income growth before adjusting for inflation. Most other analysts have been looking at real income and touting the faster growth in real incomes, thanks to recent declines in headline inflation. Given that headline inflation has gone negative because of falling gas prices, this is nothing more than a restatement of the claim that falling gas prices will stoke consumption, a claim that we are still waiting to see bear fruit.

To us, decelerating income growth is hardly an impetus for accelerating spending growth. 3% growth plus or minus in nominal income is not horrible, but neither is it supportive of faster consumption growth than we have seen recently. Look for the consumer to continue to bide his time. The recent spending data are in accord with this assessment.

Income Growth
Income Growth
Chart Source: Bureau of Economic Analysis. As of 31 Jul 15

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2022. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorized and regulated by Comissão de Valores Mobiliários and Brazilian Central Bank. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.