Reflected increases in compensation and proprietors’ income

Personal income in America inched up by 0.5 per cent to US$113.4 billion in May, according to the US Bureau of Economic Analysis monthly economic analysis, which was released today (June 30).

Disposable personal income (DPI) increased to US$96.5 billion, which is a 0.5 per cent rise, while personal consumption expenditures (PCE) rose by 0.2 per cent to US$32.7 billion. Real DPI decreased by  0.1 per cent in May while Real PCE was down 0.4 per cent.

Goods went down 1.6 per cent and services went up 0.3 per cent. The PCE price index increased 0.6 per cent. Excluding food and energy, the PCE price index rose by 0.3 per cent.

The increase in personal income in May primarily reflected increases in compensation and proprietors’ income that were partly offset by a decrease in government social benefits. Within compensation, the increase reflected increases in both private and government wages and salaries.

Factors contributing to increase in proprietors’ income

The increase in proprietors’ income was led by nonfarm income. The decline in government social benefits primarily reflected a decrease in “other” benefits that was partly offset by increases in Medicaid and Medicare.

Within “other” benefits, the decrease primarily reflected a decline in transfers to non-profit health care providers through the Provider Relief Fund. The US$32.7 billion increase in current-dollar PCE in May reflected an increase of US$76.2 billion in spending for services that was partly offset by a decrease of US$43.5 billion in spending for goods.

Within services, increases in housing and utilities (led by housing), “other” services (led by international travel), and health care (led by hospitals) were the largest contributors. Within goods, a decrease in spending on motor vehicles and parts (led by new motor vehicles) was partly offset by an increase in gasoline and other energy goods (led by motor vehicle fuels).

Personal outlays increased US$38.3 billion in May. Personal saving was US$1.01 trillion in May and the personal saving rate—personal saving as a percentage of disposable personal income was 5.4 per cent.

The PCE price index for May increased 6.3 per cent from one year ago, reflecting increases in both goods and services. Energy prices increased 35.8 per cent while food prices increased 11.0 per cent.

Excluding food and energy, the PCE price index for May increased 4.7 per cent from one year ago.