Personal income and spending were rebounding in June

Wells Fargo Research Team Wells Fargo

Today's personal income and spending report offers another tantalizing look at the rebound that might have been. Wages and salaries continued to rise, fueling strong spending.

Drop in Government Transfers

Personal income slipped 1.1% in June, a larger decline than had been expected. The absence of government stimulus checks was the key factor in the decline. The money being paid out in unemployment benefits also rose by a much smaller amount than in the prior month amid strong job growth in June.

As businesses began re-opening in June, wages and salaries rose 2.3% and proprietors' income shot up 5.5%.

Goods Rebound Complete, Services Need Help

The V-shape recovery has already come to real durable goods spending which rose another 8.8% in June pushing the level of outlays here further into record territory.

The much larger services category is still digging out. After a 5.0% June increase the real level here is still 11.6% shy of it prerecession peak. The rebound in both categories remains vulnerable to virus flare-up and potential re-opening rollbacks.

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Wells Fargo Research Team

Wells Fargo

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