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Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights personal income and the savings rate.
- Personal income grew slightly in May to $13.06 trillion on an annualized basis, or to about $54,000 on average for each adult. Compared to one year ago, the aggregate national income is higher by 4.2 percent. The gain in rental income was particularly strong.
- The bulk of income is from wages, which were higher by 2.8 percent. Entrepreneur’s income (also known as proprietor’s income) fell slightly over the month but was higher by 5 percent compared to one year ago. Rental income rose solidly by 13.6 percent, which implies increased occupancy rates and higher rents.
- Income from unemployment checks fell 17 percent, implying some improvement in the labor market or that some of the unemployed have reached the time limit to receive their checks.
- The savings rate stood at 5 percent, which is about the level of the past three years. From the days of the dot.com bubble to the housing market bubble, the savings rate had fallen to essentially zero. The revival of savings will be healthier for the individual and the country in the long run. However, in the short run, it means slower consumer spending growth and economic expansion.
- With mortgage availability exceptionally tight, rising savings will help with down payments for future home buyers.
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