Large Drop Attributed to Unusual April Payments : Personal Income Off 0.5% in May
Americans’ personal income declined 0.5% in May from April, but the sharp drop was attributed to unusual factors that had put the April figure at an artificially high level, the government said Wednesday.
Income fell $16.5 billion last month to an adjusted $3.172-trillion annual rate after rising a revised 1% in April, the Commerce Department said.
A one-time retroactive wage payment to postal employees and unusually large subsidy payments to farmers contributed to the April figure. It was revised upward from 0.6%, mostly because of later data on the farm payments.
Without the retroactive postal wage settlement and the big surge in farm payments, personal income for May would have risen 0.4% instead of declining, the department said.
Private wages and salaries, meanwhile, increased at an annual rate of $7 billion in May, compared to a $4.2-billion increase in April. Both personal spending and personal saving also rose.
John M. Albertine, president of the American Business Conference, said the May drop in personal income was “not a symptom of an economy skidding to a halt.”
“On the contrary,” he said, “it reflects yet another set of the bizarre statistical peculiarities that have plagued economic statistics since last fall. Once we plow through this maze of statistical quirks--the effects of strikes here and abroad, the timing of farm subsidies and the retroactive wage settlements--it is still apparent that the recovery is coasting. It’s not generating much momentum these days, but it’s not about to stall out either.”
The government is scheduled today to release its preliminary estimate of second-quarter economic growth, and most analysts expect it to be well above the 0.7% first-quarter growth in gross national product.
Noting a sharp jump in personal savings last month, Albertine said that, “while this may depress the short-term economic indicators, in the long term it will make us better off.”
The department issued revised figures showing personal income rose 0.3% in March, 0.5% in February and 0.6% in January.
The figure that goes on the books for May stands as the first decline since a 0.1% drop in February, 1983, and the sharpest since a 0.8% decline in June, 1972.
The monthly figures are adjusted for normal seasonal fluctuations but not for unusual events like the two developments that skewed the April figure. Personal income figures are not adjusted for inflation.
Despite the drop in income, personal consumption spending increased 0.7% in May after a revised 1% increase in April. The department previously had reported the April spending increase at 0.7%.
Private wages and salaries rose 0.3% in May after a 0.5% increase the previous month.
Factory payrolls were up 0.2% in May after falling 0.4% in April.
Personal saving as a percentage of disposal personal income stood at 6.6% in May, up from 5.3% in April. The May figure is the highest since the 6.7% rate last August and the third straight increase in the savings ratio.