Skip to main content

Personal Income Growth Slowing in U.S.

After rising for many months during 2014 and the first few months of 2015, monthly U.S. disposable income growth has stabilized and tapered off, tempering consumer spending and saving, according to data released last week by the U.S. Department of Commerce.

Personal disposable (after-tax) income jumped 4 percent for the second straight month in May on a 12-month smoothed basis, slightly below the 4.1% increases of January, February and March, but well above the monthly increases seen in 2013 and most of 2014 as employers continued to add people to their payrolls and unemployment improved.

However, consumer spending, that important driver of economic growth, rose by only 3.6% compared to the same month last year, to an annualized $12.2 trillion.

Spending has been growing in recent months, but at a slightly declining rate.


The savings rate, or percent of disposable income socked away in savings and investment, dropped to 5.1% in May from 5.4% in April.


Surges in spending on durable goods and services, which gained 5 percent and 4.5%, respectively, were more than offset by sluggish nondurables spending, which rose by a negligible 0.3%.


Within nondurables spending, apparel and footwear held their own in the month, rising by a collective 2.7% on a 12-month smoothed basis.