Disposable Income Revised Higher In June

In the latest release, disposable income was revised higher, pushing the rate of growth above its historical average.

In June 2019, real disposable income was $15,007 billion, which was its highest level ever and its first time above $15,000 billion. Recent income data was revised, accelerating the month-over-month growth rate compared with last month’s data release. In June, the month-over-month rate of growth was 3.3%, which was the 21st consecutive month of growth above the historical average. However, the rate of growth in 2019 was noticeably slower than the rate of growth in 2018.

The annual rate of growth decelerated to 3.6%, which was its slowest rate of growth since May 2018. Also, it was down from its peak rate of growth of 4.0% in December 2018. This is a dramatic difference from the May data release where the annual rate of growth was either 2.7% or 2.8% since January 2018. With noticeably slower growth since the beginning of the year , it is likely that the annual rate of growth in disposable income will decelerate more in the months ahead.

Keep in mind that changes in real disposable income typically leads capital equipment consumption by almost 24 months.

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