Personal Income, Spending Up by Modest 0.4% During July

U.S. personal income rose a modest 0.4% in July, the same as in June, while spending for goods and services also increased moderately, government economists said today.

The increase in income, before income taxes were withheld, amounted to $42 a year for every American and a per-capita income that was raised to $11,340.

The income gain would have been smaller except for an exceptionally large Social Security benefit during the month that resulted from a recalculation of the wage base, the Bureau of Economic Analysis said.

The month’s 0.4% increase in personal spending was the same as the June increase.

The spending figures are being watched closely by economists, who are worried that consumers are becoming more reluctant to spend heavily and will cause the return of a lackluster economy.

Earlier this month the Census Bureau reported retail sales--limited to merchandise--rose 0.4%.

With income and spending increasing at the same rate, Americans held the savings rate to 3.4% in July for the second consecutive month, a marked slowdown in savings from 6.2% of disposable income in May.