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U.S. June Personal Income and Spending (Text)

Following is the text of the U.S. personal income report for June from the Commerce Department.

PERSONAL INCOME AND OUTLAYS: JUNE 2013

REVISED ESTIMATES: 1929 THROUGH MAY 2013

Personal income increased $45.4 billion, or 0.3 percent, and disposable personal income (DPI) increased $33.6 billion, or 0.3 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $59.4 billion, or 0.5 percent. In May, personal income increased $49.5 billion, or 0.4 percent, DPI increased $38.2 billion, or 0.3 percent, and PCE increased $19.3 billion, or 0.2 percent, based on revised estimates.

Real disposable personal income decreased 0.1 percent in June, in contrast to an increase of 0.2 percent in May. Real PCE increased 0.1 percent in June, the same increase as in May.

Comprehensive Revision of the National Income and Product Accounts

The estimates released today reflect the 14th comprehensive (or benchmark) revision of the national income and product accounts, including revised estimates of personal income and outlays in conjunction with preliminary estimates for June 2013.

Wages and salaries

Private wages and salaries increased $38.0 billion in June, compared with an increase of $19.1 billion in May. Goods-producing industries’ payrolls increased $5.9 billion, compared with an increase of $5.0 billion; manufacturing payrolls increased $4.2 billion, compared with an increase of $1.8 billion. Services-producing industries’ payrolls increased $32.0 billion, compared with an increase of $14.2 billion. Government wages and salaries decreased $0.5 billion, in contrast to an increase of $0.3 billion.

Other personal income

Supplements to wages and salaries increased $4.2 billion in June, compared with an increase of $2.5 billion in May.

Proprietors’ income decreased $21.7 billion in June, compared with a decrease of $16.3 billion in May. Farm proprietors’ income decreased $24.0 billion, compared with a decrease of $24.1 billion. Nonfarm proprietors’ income increased $2.3 billion, compared with an increase of $7.8 billion.

Rental income of persons increased $1.5 billion in June, the same increase as in May. Personal income receipts on assets (personal interest income plus personal dividend income) increased $22.7 billion in June, compared with an increase of $26.3 billion in May.

Personal current transfer receipts increased $6.0 billion in June, compared with an increase of $18.4 billion in May. Within current transfer receipts, government social benefits to persons for social security increased $4.2 billion, compared with an increase of $11.5 billion in May.

Contributions for government social insurance -- a subtraction in calculating personal income -- increased $4.9 billion in June, compared with an increase of $2.3 billion in May.

Personal current taxes and disposable personal income

Personal current taxes increased $11.8 billion in June, compared with an increase of $11.3 billion in May. Disposable personal income (DPI) -- personal income less personal current taxes -- increased $33.6 billion, or 0.3 percent, in June, compared with an increase of $38.2 billion, or 0.3 percent, in May.

Personal outlays and personal saving

Personal outlays -- PCE, personal interest payments, and personal current transfer payments -- increased $55.3 billion in June, compared with an increase of $15.1 billion in May. PCE increased $59.4 billion, compared with an increase of $19.3 billion.

Personal saving -- DPI less personal outlays -- was $546.6 billion in June, compared with $568.3 billion in May. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 4.4 percent in June, compared with 4.6 percent in May. For a comparison of personal saving in BEA’s national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and data on changes in net worth, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Real DPI, real PCE and price index

Real DPI -- DPI adjusted to remove price changes -- decreased 0.1 percent in June, in contrast to an increase of 0.2 percent in May.

Real PCE -- PCE adjusted to remove price changes -- increased 0.1 percent in June, the same increase as in May. Purchases of durable goods increased 0.9 percent in June, compared with an increase of 0.6 percent in May. Purchases of nondurable goods increased 0.2 percent, compared with an increase of 0.6 percent. Purchases of services decreased less than 0.1 percent, compared with a decrease of 0.2 percent.

The price index for PCE increased 0.4 percent in June, compared with an increase of 0.1 percent in May. The PCE price index, excluding food and energy, increased 0.2 percent, compared with an increase of 0.1 percent.

NOTE. BEA acknowledges the special efforts by the Bureau of Labor Statistics with the assistance of 18 state employment offices in providing preliminary data for the first quarter of 2013 from the quarterly census of employment and wages (QCEW). Wage and salary data from the state employment offices of California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Maryland, Massachusetts, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Texas, and Utah were provided. These data have greatly improved the estimates of wages and salaries.

Revision of the Personal Income and Outlay Estimates

The statistics released today reflect the results of the 14th comprehensive (or benchmark) revision of the national income and product accounts (NIPAs). Comprehensive revisions incorporate several improvements, including changes in definitions and classifications that update the accounts to more accurately portray the evolving U.S. economy, changes in presentation that make the NIPA tables more informative and easier to use, and statistical changes that introduce new and improved methodologies and that bring in newly available and revised source data.

For this comprehensive revision, personal outlays, DPI, and personal saving are revised from 1929 through May of 2013.

The revisions to personal income and outlays, for 2010-2012, are shown in table 12. Revised and previously published monthly estimates of personal income, DPI, PCE, personal saving as a percentage of DPI, real DPI, and real PCE are shown in table 13; revised and previously published annual and quarterly estimates are shown in table 14.

Personal income was revised up for 1929-2007, down for 2008, and up for 2009-2012. These revisions mainly reflect

the accrual approach for measuring defined benefit pension plans, which results in upward revisions to personal income receipts on assets for 1929・012 and in upward revisions to supplements (specifically, employer contributions for employee pension and insurance funds) for 1929-1975, for 1989-2002, and for 2004-2011. A number of other definitional and statistical changes affected the revisions to personal income. The revisions to the components of personal income are discussed below.

The revisions to wages and salaries mainly reflect revisions to private wages and salaries. The revisions are generally small and mixed for years prior to 2002, are downward for 2002-2011, and are upward for 2012. The revisions reflect revised estimates of misreporting and new and revised BLS QCEW data.

The revisions to supplements reflect the revisions to employer contributions for pension and insurance funds that result from the accrual approach for measuring defined benefit pension plans. Employer contributions for state and local government defined benefit plans was revised up for 1929-1978, down for 1979-1986, and up for 1987-2012. Employer contributions for federal government defined benefit plans was revised up for 1929-1979 and down for 1980-2012. Employer contributions for private defined benefit plans was revised down for 1968-1985, up for 1986-2001, down for 2002-2006, up for 2007, and down for 2008-2012. Contributions for state and local government defined contribution pension plans was revised up for 1967-2012, reflecting the incorporation of improved source data.

Proprietors・income was revised down for 1965-2011 and up for 2012; the revisions for years before 1965 are small. Nonfarm proprietors・income was revised down for 1965-2011 and up for 2012. The revisions to proprietors・income primarily reflect revisions to nonfarm proprietors・income for most years (except for 2009 and for 2012). Farm proprietors・income had relatively large upward revisions for 2011 and 2012, reflecting the incorporation of revised USDA data for 2010-2012.

The revisions to nonfarm proprietors・income reflect a number of definitional and statistical changes as well as revised source data. Revisions due to the improved accounting for the capital gains and losses attributable to corporate partners are downward for 2002-2008, upward for 2009, and downward for 2010-2012. Revisions due to the capitalization of expenditures for the creation of entertainment, literary, and artistic originals and for an expanded set of ownership transfer costs are downward, while the revisions due to the capitalization of R&D expenditures are upward. The revisions also reflect new Internal Revenue Service (IRS) estimates for underreporting of income as well as new IRS tabulations of tax return data for sole proprietorships and partnerships for 2011.

Rental income of persons was revised down for 1929-2002 and was revised up for 2003 forward. The improved methodology for estimating mortgage interest paid for nonfarm permanent site housing results in downward revisions to rental income of persons for 1993-2001 and upward revisions for 2002-2012. The recognition of an expanded set of ownership transfer costs for residential assets as fixed investment results in downward revisions for all years, partly offsetting the upward revisions due to the improved estimates of mortgage interest paid in for 2003-2012. The revisions also reflect revisions to owner- and tenant-occupied space rent, based on data from the 2010 Census of Housing and the incorporation of other new and revised source data.

Personal interest income was revised up for all years except for 2008. The upward revisions mainly reflect the new accrual treatment of defined benefit pension plans. Personal interest income was also affected by several other changes in methodology, including an improved method for distributing the investment income of regulated investment companies by type of income and the improved method for measuring interest associated with financial services of commercial banks. Revisions to personal interest income also reflect the incorporation of new and revised source data from the Federal Reserve Board and other sources.

Personal dividend income was revised up for most years for 1991-2009, was revised down for 2010, was revised up for 2011, and was revised down for 2012. The revisions to personal dividend income reflect the improved method for distributing the investment income of regulated investment companies by type of income as well as the incorporation of new and revised IRS tabulations of corporate tax returns and of data from BEA’s international transactions accounts on dividends from the rest of the world.

Personal current transfer receipts was revised down for 2002, up for 2003-2009, and down for 2010-2012. The revisions reflect the incorporation of new and revised source data.

The revisions to contributions for government social insurance (which is deducted in the calculation of personal income) are small for 2002-2012.

Personal current taxes was revised up for 2011 and 2012; revisions are generally small for prior years. The revisions reflect the incorporation of new tax collections data from the Treasury Department and the Social Security Administration and of new and revised Census Bureau state and local government finances data.

The pattern of revisions to disposable personal income, which is equal to personal income less personal current taxes, is similar to that of personal income.

Personal outlays consists of PCE, personal interest payments, and personal current transfer payments. The revisions to personal outlays primarily reflect the revisions to PCE. Revisions to PCE are generally small before 1985; PCE was revised up for 1985 and 1986, down for 1987-2011, and up for 2012. PCE for services accounts for most of the revisions for all years except for 2011. Personal interest payments was revised up for 1985 forward; revisions for prior years are small. The revisions to personal interest payments result from the improved method for measuring the financial services of commercial banks and from the incorporation of new and revised source data. Personal current transfer payments was revised down for 2007-2012.

Personal saving (DPI less personal outlays) was revised up for 1929-2007, down for 2008, and up for 2009-2012. These revisions reflect the revisions to DPI and are mainly the result of adopting the accrual treatment of defined benefit pension plans. The personal saving rate (personal saving as a percentage of DPI) was revised up for 1929-2007, down for 2008, and up for 2009-2012, reflecting the revisions to personal saving.

SOURCE: U.S. Commerce Department. http://www.bea.gov

To contact the reporter on this story: Kristy Scheuble in Washington at kmckeaney@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net

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