Income increased significantly in July. Nominal personal income rose 1.1% to $ 20.67 trillion in the month, accelerating from June’s 0.2% monthly increase, according to government figures on Friday.
Why is this important: The July hiring wave and the expansion of child tax credits were behind this growth.
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This last form of aid, which began in mid-month and continues until the end of the year, comes at a key moment.
Additional unemployment benefits are ending, and because consumers cut spending last month over new COVID concerns, the hidden sums will translate into future economic growth.
Salaries and treatments, which excludes government assistance payments and other supplements, rose 0.9% month-on-month to a new high of $ 10.25 trillion amid job creation .
In numbers : Disposable household income, or personal income minus taxes, rose for the first time since March, 0.7% to $ 18.05 trillion.
Growth in consumer spending slowed to 0.3% in July, which helped savings growth.
Because income exceeded expenses, personal savings reached $ 1.72 trillion, resulting in a personal savings rate of 9.6% in July, up from 8.8% in June.
What they say : “As the expiration of UI benefits and the lack of another round of checks for families will weigh on income growth in 2022, the ongoing child tax credit and rebound in l ’employment and wages are expected to support household spending next year, “Oxford Economics said in a research note. Friday.
What to watch: “[W]We believe that more moderate growth in consumer spending is more likely than a downturn in consumers and the economy reversing, ”notes Oxford.
Go further: U.S. consumer sentiment slumps as Delta variant rises
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