Early this morning the Commerce Department's Bureau of Economic Analysis issued its August report on Personal Income [money we all have coming in] and Personal Consumption Expenditures [money we spend to buy stuff]. You may recall, a couple weeks ago, I mentioned that Personal Consumption Expenditures constitute 2/3 of the Gross Domestic Product. So, these expenditures are a significant component of the primary measure of the national economy. Personal Income is equally significant because it provides the money we use to buy the stuff we buy.
From July to August Personal income increased $2.3 billion, or .04%. Personal consumption outlays increased $47.6 billion, a little less than 1.0%. Taking a slightly longer-term perspective: for 1995 so far both Personal Income and Personal Consumption grew at a seasonally adjusted annual rate of 6.4%. This compares with 1994 income and spending growth rates of 6.1% and 5.7%. So it seems that, despite the Fed-engineered slowdown of the economy, incomes and spending this year are growing at a slightly brisker pace than last year.
An mid morning another arm of the Commerce Department, The Bureau of the Census, released its construction spending report for August. The value of new construction put in place during August was estimated at a seasonally adjusted annual rate of $530.4 billion. This was a little less than last month's revised estimate of $531.6 billion. The August figure is 4% higher than that for a year ago.
In light of the importance of the consumer to the overall economy, it might be interesting to take a look at spending for residential construction in recent months. From December 1994 to June 1995 the annualized rate of new construction for private residential buildings fell from $243.6 billion to $232.7 billion. This translates into an 8.95% per year drop. From the low in June the residential new construction annual rate grew to this month's reading of $241.8 billion. This is eqivalent to a 23.46% annual growth rate. So, after a six-month fall off, the rate of expenditure on residential construction has perked up. What's next? We'll check again next month and see.
While all this was going on the National Association of Purchasing Management was releasing the September value for its monthly index of the status of manufacturing companies. From August to September the index improved from 46.9 to 48.3. The detailed interpretation of this index is discussed in last Friday's Today's Economy. Briefly, this month's reading indicates an expanding economy with less weakness this month than last in the manufacturing sector.
Transmitted: 95-09-29