U.S. Personal Income Rises a Modest 0.3%

Americans’ personal income, held back by a decline in subsidy payments to farmers, rose a modest 0.3% in May, the government said today.

However, because of a decrease in federal tax payments, which followed a big tax bite in April, Americans’ disposable personal income shot up 1.5% in May, the Commerce Department said. That followed a 1% decline in after-tax income in April, the biggest drop since April, 1987.

Before-tax income had edged up 0.1% in April after a 1.2% surge in March.

Today’s report said both the April and May increases look weaker because March income was boosted by profit-sharing payments to auto workers and retroactive Social Security payments. A lag in federal payments to farmers also held back the May advance.

Excluding those special factors, the government said personal income would have advanced 0.8% in April and 0.4% in May.

Personal consumption expenditures, which include virtually everything except interest on debt, rose a moderate 0.5% in May after a 0.4% rise in April.

Americans saved $151.9 billion in May, contrasted with $119.6 billion in April, boosting the personal savings rate to 4.5%, up from 3.6%. The April savings rate was unusually low because of income tax payments.