Stagnant Jobs, Flat Incomes Don't Slow Spending

September 3, 2002 ( - Thanks to a stagnant job market, worker incomes were flat in July, but that didn't restrain their spending tendencies.

Worker incomes, which include wages, interest, and government benefits, were flat in July, compared with a 0.7% spike in June.  Wages and salaries actually fell by 0.2%, according to the Commerce Department.  Disposable or after-tax incomes rose by 0.2% after a 0.7% increase the month before.

Income growth was weaker than the 0.2% increase anticipated by many analysts, while the 1% growth in spending was stronger than the 0.7% increase anticipated.  In fact, July’s spending increase was the largest – and the incomes the lowest – since October.

With spending outpacing income growth in July, the nation’s personal savings rate – savings as a percentage of after-tax income – dipped to 3.4% in July from 4.2% in June.  That was the smallest rate since December.