Personal Income Up 0.5 Percent, Consumption Up 0.4 Percent; Savings Rate Up to 5.8 Percent

In August, personal income grew at a brisk pace of 0.5 percent. The increase was boosted by an increase in government transfer payments associated with extending unemployment checks. Even so, wages still had a solid showing, growing 0.3 percent. From a year-prior, personal incomes were 3.3 percent higher.

Personal consumption rose 0.4 percent in August for the second straight month. Spending growth was primarily due to increased expenditures on non-durable goods. Big ticket item expenditures fell 0.1 percent, while services added modestly to growth. Consumption was 2.7 percent higher than a year prior.

The slightly slowest pace of consumption growth relative to incomes caused the savings rate to rise slightly by 0.1 percent to 5.8 percent. The savings rate has remained near this level since April.

This is consistent with the data that shows the recession is "over". People are spending more now than they have in a long time and that is in no small part because their personal spending income has increased. Hopefully this trend can continue.