Americans' personal income rose a modest 0.2 percent in August, the weakest gain in eight months, while consumer spending was up at a slightly brisker 0.5 percent rate, the government reported.
The Commerce Department said that the small $7.2 billion gain in income last month to a seasonally adjusted annual rate of $4.08 trillion followed strong increases of 0.7 percent in July and 0.6 percent in June.Personal consumption spending, which includes everything except interest payments on debt, rose 0.5 percent in August following a 0.3 percent gain in July and a 1.3 percent jump in June, the biggest in nearly a year.
As in June and July, personal income was held back by declines in subsidy payments to farmers. The payments shrank $6.2 billion in August and $6.1 billion in July. However, in an apparent indication of the drought, farm income excluding subsidies fell $3.2 billion in August, compared with $700 million in July.
Wages and salaries, a key component of personal income, were up a modest 0.3 percent in August compared with a healthy 1.0 percent gain in July. That's consistent with an earlier report from the Labor Department showing unemployment rising from 5.4 percent in July to 5.6 percent last month.
With spending rising slightly faster than income, the personal savings rate - savings as a percentage of after-tax personal income - edged down from 4.2 percent in July to 3.9 percent in August. The savings rate this year has been averaging around 4 percent, up from 3.2 percent last year.
The spending gain was strongest for services, up $12.7 billion following a $9.6 billion rise in July. Purchases of non-durable goods rose $2.5 billion following a $3.6 billion increase a month earlier.