Income a tenth lower than expected and remains depressed, spending was a tenth better than expected and up on higher energy prices. So looks to me like a mini ‘dip into savings’ that works against retail sales, etc. but just a guess.

Prices a touch softer than expected and remain well below Fed’s target.

And note the deceleration of the annual growth of real disposable personal income as per the chart, which is down to stall speed:


The consumer continues to spend though income isn’t that strong. Personal income, for a second month in a row, inched 0.2 percent higher in June, in contrast to spending which, also for a second month in a row, rose 0.4 percent. The gain in spending was funded to a degree by savings as the savings rate is down 2 tenths to 5.3 percent.

There isn’t much positive movement in inflation data with both the overall PCE index and the core index (ex-food ex-energy) up only 0.1 percent. Year-on-year shows no improvement at all with the overall rate unchanged at plus 0.9 percent and unchanged at plus 1.6 percent for the core.

Turning back to income, wages & salaries did improve a bit, up 1 tenth for a plus 0.3 percent gain. Details on spending show an outsized 0.7 percent increase in nondurables in a gain, however, tied in part to higher oil prices, not increased demand. Service spending rose a very solid 0.5 percent for a second straight month while durable goods fell 0.3 percent in June following a 0.4 percent decline in May, both reflecting weak vehicle sales. Durable goods are a sleeper here for July, possibly bouncing back should vehicle sales prove strong (July unit vehicle sales will be posted through the day).

This report is moderate. The strength in spending needs to continue for the economy but spending won’t have much legs if income doesn’t pick up.

Note the general deceleration in consumption after oil capex collapsed:

And the latest mini move up came after a mini dip:

And this keeps getting worse, most recently perhaps due to the increased spending on energy?

Seems when the rig count went up they cut prices, as per my post a few weeks ago, and it’s still ongoing:

Saudi Arabia Cuts Oil Price to Asia as Iran Battle Heats Up

By Sam Wilkin

August 2 (Bloomberg) — Saudi Aramco, the world’s largest oil exporter, lowered the pricing terms for Arab Light crude sold to Asia by the most in 10 months, signaling Saudi Arabia has no plans to back down while OPEC rival Iran tries to regain market share amid a global

State-owned Saudi Arabian Oil Co. said Sunday it will sell cargoes of Arab Light in September at $1.10 a barrel below Asia’s regional benchmark. That is a pricing cut of $1.30 from August, the biggest drop since November, according to data compiled by Bloomberg. The company was expected to lower the pricing by $1 a barrel, according to the median estimate in a Bloomberg survey of eight refiners and traders.

This is the last Saudi discount chart before the most recent announcements: