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U.S. income rises 0.6 percent
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September 29, 1997: 9:04 a.m. ET
August earnings rose despite impact of UPS strike; spending gain was lower
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NEW YORK (CNNfn) - Americans' incomes grew modestly while they throttled back on spending, the Commerce Department said Monday.
Personal income rose 0.6 percent in August to a seasonally adjusted annual rate of $6.919 trillion, slightly higher than Wall Street's expectations of a 0.5 percent gain.
Spending didn't keep pace, however, rising 0.3 percent to a rate of $5.521 trillion, just under economists' predictions of a 0.4 percent gain.
The disparity resulted in a rise to 3.6 percent in the U.S. savings rate last month from a revised 3.7 percent in July.
The Commerce Department also revised July figures, which showed a 0.2 percent rise in personal income from an earlier figure of 0.1 percent. Spending pushed 1 percent higher from a 0.8 percent increase.
Income growth is an important component to inflation watchers since consumer spending makes up about two-thirds of the nation's economic activity. But Rosanne Cahn, chief economist at CS First Boston, said the August increase is manageable.
"Wage gains, while healthy, are not accelerating at any particularly noticeable speed," she said. "It's the acceleration you have to watch out for."
The income increase occurred despite the United Parcel Service strike during part of August. Commerce said the strike reduced wages and salaries in the transportation industry by about $2.5 billion.
-- Randy Schultz
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