News Release
Personal Income and Outlays, July 2008
July 2008
Personal income decreased $89.9 billion, or 0.7 percent, in July, in contrast to an increase of $7.4 billion, or 0.1 percent, in June and an increase of $218.0 billion, or 1.8 percent, in May. Disposable personal income (DPI) decreased $114.7 billion, or 1.1 percent, in July, compared with a decrease of $208.0 billion, or 1.9 percent, in June and an increase of $595.9 billion, or 5.7 percent in May. Personal consumption expenditures (PCE) increased $24.1 billion, or 0.2 percent, in July, compared with an increase of $65.5 billion, or 0.6 percent, in June. The pattern of changes in income reflects the pattern of payments associated with the Economic Stimulus Act of 2008 (see page 2). Real DPI decreased 1.7 percent in July, compared with a decrease of 2.6 percent in June. Real PCE decreased 0.4 percent, compared with a decrease of 0.1 percent. 2008 Mar. Apr. May June July (Percent change from preceding month) Personal income, current dollars 0.4 0.2 1.8 0.1 -0.7 Disposable personal income: Current dollars 0.4 0.3 5.7 -1.9 -1.1 Chained (2000) dollars 0.1 0.1 5.2 -2.6 -1.7 Personal consumption expenditures: Current dollars 0.6 0.4 0.8 0.6 0.2 Chained (2000) dollars 0.3 0.1 0.3 -0.1 -0.4 In April, May, June, and July, changes in disposable personal income (DPI) -- personal income less personal current taxes -- were affected by the Economic Stimulus Act of 2008. The federal government issued rebate payments of $1.9 billion in April ($23.3 billion at an annual rate), of $48.1 billion in May ($577.1 billion at an annual rate), of $27.9 billion in June ($334.4 billion at an annual rate), and of $13.7 billion in July ($164.1 billion at an annual rate). These rebates increased government social benefit payments and reduced personal current taxes. The rebates boosted the change in DPI $23.3 billion in April and $553.8 billion in May, and reduced the change in DPI by $242.7 billion in June and by $170.3 billion in July. Excluding these rebate payments, which are discussed more fully below, DPI increased $55.6 billion, or 0.5 percent, in July, increased $34.7 billion, or 0.3 percent, in June, and increased $42.1 billion, or 0.4 percent, in May. Wages and salaries Private wage and salary disbursements increased $13.2 billion in July, compared with an increase of $7.9 billion in June. Goods-producing industries' payrolls increased $4.6 billion, compared with an increase of $1.8 billion; manufacturing payrolls increased $0.7 billion, compared with an increase of $1.7 billion. Services-producing industries' payrolls increased $8.6 billion, compared with an increase of $6.0 billion. Government wage and salary disbursements increased $4.3 billion, compared with an increase of $6.1 billion. Other personal income Supplements to wages and salaries increased $3.8 billion in July, compared with an increase of $3.3 billion in June. Proprietors' income increased $4.4 billion in July, compared with an increase of $7.6 billion in June. Farm proprietors' income decreased $2.3 billion, compared with a decrease of $2.0 billion. Nonfarm proprietors' income increased $6.8 billion, compared with an increase of $9.6 billion. Rental income of persons increased $4.4 billion in July, compared with an increase of $7.4 billion in June. Personal income receipts on assets (personal interest income plus personal dividend income) increased $18.4 billion, in contrast to a decrease of $4.2 billion. Personal current transfer receipts decreased $136.6 billion in July, compared with a decrease of $19.6 billion in June. The July and June changes reflected provisions of the Economic Stimulus Act of 2008, which boosted the level of personal current transfer receipts by $4.2 billion (at an annual rate) in July, by $149.4 billion in June, and by $179.6 billion in May. These personal current transfer receipts reflected payments to individuals who either paid no income tax or whose payment exceeded the amount of income tax paid (see box on page 6). Contributions for government social insurance -- a subtraction in calculating personal income -- increased $1.7 billion in July, compared with an increase of $1.1 billion in June. Personal current taxes and disposable personal income Personal current taxes increased $24.7 billion in July, compared with an increase of $215.5 billion in June. Provisions of the Economic Stimulus Act of 2008 reduced the level of personal current taxes by $159.9 billion (at an annual rate) in July, by $185.0 billion in June, and by $397.5 billion in May. The reductions in current personal taxes reflected rebate payments to eligible individual taxpayers (see box below). Disposable personal income (DPI) -- personal income less personal current taxes -- decreased 114.7 billion, or 1.1 percent, in July, compared with a decrease of $208.0 billion, or 1.9 percent, in June. Personal outlays and personal saving Personal outlays -- PCE, personal interest payments, and personal current transfer payments -- increased $24.4 billion in July, compared with an increase of $63.2 billion in June. PCE increased $24.1 billion, compared with an increase of $65.5 billion. Personal saving -- DPI less personal outlays -- was $133.8 billion in July, compared with $272.9 billion in June. Personal saving as a percentage of disposable personal income was 1.2 percent in July, compared with 2.5 percent in June. Saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods. For more information, see the FAQs on "Personal Saving" on BEA's Web site. For a comparison of personal saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's flow of funds accounts, go to /bea/dn/nipaweb/Nipa-Frb.asp. Real DPI and real PCE Real DPI -- DPI adjusted to remove price changes -- decreased 1.7 percent in July, compared with a decrease of 2.6 percent in June. Real PCE -- PCE adjusted to remove price changes -- decreased 0.4 percent in July, compared with a decrease of 0.1 percent in June. Purchases of durable goods decreased 1.6 percent, compared with a decrease of 1.4 percent. Purchases of motor vehicles and parts accounted for most of the decrease in July and about one-half the decrease in June. Purchases of nondurable goods decreased 0.9 percent in July, compared with a decrease of 0.3 percent in June. Purchases of services increased less than 0.1 percent, compared with an increase of 0.2 percent. PCE price index -- The price index for PCE increased 0.6 percent in July, compared with an increase of 0.7 percent in June. The PCE price index, excluding food and energy, increased 0.3 percent in July, the same increase as in June. Revisions Estimates for personal income and DPI have been revised for January through June; estimates for PCE have been revised for April through June. Changes in personal income, current-dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for May and June -- revised and as published in last month's release -- are shown below. For January through June, the revisions to wages and salaries reflect the incorporation of the newly available BLS tabulations of first-quarter private wages and salaries from the quarterly census of employment and wages. Revisions to personal current taxes and to contributions for government social insurance reflect the revisions to wages and salaries. Change from preceding month May June Previous Revised Previous Revised Previous Revised Previous Revised (Billions of dollars) (Percent) (Billions of dollars) (Percent) Personal Income: Current dollars...................... 219.3 218.0 1.8 1.8 6.8 7.4 0.1 0.1 Disposable personal income: Current dollars...................... 595.4 595.9 5.7 5.7 -210.3 -208.0 -1.9 -1.9 Chained (2000) dollars............... 451.4 452.7 5.2 5.2 -240.7 -237.7 -2.6 -2.6 Personal consumption expenditures: Current dollars...................... 76.5 76.8 0.8 0.8 57.1 65.5 0.6 0.6 Chained (2000) dollars............... 25.6 26.5 0.3 0.3 -16.2 -8.3 -0.2 -0.1 This news release presents revised estimates of wages and salaries, personal taxes, and contributions for government social insurance for January through March 2008 (first quarter). These estimates reflect newly available first-quarter wage and salary tabulations from the quarterly census of employment and wages from the Bureau of Labor Statistics. Economic Stimulus Act of 2008 The Economic Stimulus Act of 2008 provides rebate payments to eligible individual taxpayers as well as tax reductions for businesses. For individuals, the amount of the rebate is determined by information reported on tax filings for 2007 and is based on filing status, level of adjusted gross income, and the number of qualifying children. According to the Joint Committee on Taxation and the Congressional Budget Office, rebates to individuals are expected to total $106.7 billion for fiscal year 2008. The majority of rebates were sent during the initial round of payments, which began April 28, 2008, and continued on a weekly basis through mid-July 2008. In the NIPAs, rebates for residents of the 50 states and the District of Columbia are recorded as either an offset to personal current taxes or as a social benefit payment to persons. Rebates for individuals with tax liabilities that exceed the rebate amount are treated as an offset to personal current taxes in the NIPAs. Rebates for individuals who pay no income taxes (or for whom the rebate would exceed the amount of the income taxes they do pay) are treated as a government social benefit payment to persons in the NIPAs. BEA's national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements. * * * Next release -- September 29, 2008, at 8:30 A.M. EDT for Personal Income and Outlays for August.