Personal Income Soared in June While Consumer Spending Dropped

Personal income rose $61.8 billion in June, but consumers held on to it as personal spending fell 1.3 billion in the month, the ""Bureau of Economic Analysis"":http://www.bea.gov/ reported Tuesday. The increase in income â€" 0.5 percent â€" topped expectations of a 0.4 percent boost, but the 0.01 percent decline in spending fell short of the 0.1 percent increase economists had expected.

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The numbers were consistent with last week's report of tepid Gross Domestic Product growth for the second quarter.

Disposable personal income â€" essentially after-tax income â€" rose $52.4 billion in June.

Personal savings as a percentage of disposable (after tax) income rose to 4.4 percent in June from 4.0 percent in May.

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With continuing low interest rates, personal interest payments (non-mortgage interest) fell to $169.3 billion in June from $173.0 billion in May.

Wages and salaries accounted for more than half the increase in income, improving $32.6 billion in June after increasing just 8.9 billion in May

Unemployment insurance payments fell 4.7 billion in May, the sixth straight month-month decline â€" reflecting congressional mandated reductions.

The drop personal consumption came primarily in spending on non-durable goods which dropped $14.6 billion while spending on durable goods â€" often a sign of consumer confidence â€" fell $1.3 billion. Spending on services rose $14.6 billion. The month-month decline in spending on goods was the third straight

The Personal Consumption Expenditure (PCE) Price Index â€" often considered the Federal Reserve's favored measure of inflation â€" rose 0.1 percent in June, but remained at 1.5 percent above its year ago level. In April, the year-year increase was 1.9 percent. Meanwhile, The Core PCE Index â€" excluding food and energy - rose 0.2 percent in June. The index was also up 1.8 percent in the last year, compared with a 0.1 percent increase in May, producing a 1.8 percent year-year increase. The core inflation rate in April was 1.9 percent