Housing Starts Inch Up 1.9%

Housing starts inched up 1.9% in June while personal income and spending increased a moderate amount, government economists said today.

The improvement in housing starts was a weak rebound from May’s 13.45% decline and took the annual rate of starts to 1.705 million, 7% below the level a year earlier.

Personal income rose 0.5% in June, the same amount it had fallen in May. But after-tax “take-home” pay plummeted 2.2%, the biggest decline in 10 years.

The dramatic decline was a result of the unusual boost in income in previous months from late income tax refunds. Had those refunds not swollen disposable income in April and May, the June figure would have been positive instead of negative, the Bureau of Economic Analysis said.

Personal spending was up 0.6% in June, the same as in May but half the increase in April.

With disposable income declining and spending moderately strong, the amount counted by the government as savings plunged. The savings rate slipped to 3.9% in June, the lowest in a year, from the 6.5% in May.