May Personal Income rose 1.4%, well above expectations of a .3% gain and April was revised up by .2% with the influence being “the increased government social benefit payments associated with the” stimulus plan. Disposable income as a result rose 1.6% BUT ex these special factors, disposable income rose just .2% as wages and salary’s fell by .1%. Due to the steroid shot into incomes, the savings rate rose to 6.9% after Personal Spending rose .3%, in line with forecasts. Because headline PCE rose .1%, REAL spending rose .2%, the first real gain since Jan. Bottom line, analyzing the savings rate has become more difficult in light of the one time special government transfer payments and with spending rising more than disposable income this month, the real savings rate likely would have fell a touch.
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