Does anybody else see a bit of a problem with these trends?
The Commerce Department said consumer spending, which comprises about two-thirds of U.S. economic activity, grew 0.8 percent in the month, in line with expectations of analysts polled by Reuters. June personal spending was revised up to 0.6 percent from 0.3 percent.Remarkably, wage and salary disbursements actually fell $500 million as workers in all but the service industries took a hit. Personal consumption has been rising faster than disposable personal income for some time now; in five of the seven months this year, consumption rose faster than income. The big 1.5% rise (in current dollars) in disposable personal income was bought in July with Bush's one-off tax rebate. The underlying trends for consumption, however, don't look good -- unless we get annual tax rebate checks in perpetuity.
Personal income grew 0.2 percent in July, less than the 0.3 percent growth rate expected by economists.