by Calculated Risk on 7/31/2020 08:39:00 AM

The BEA released the Personal Income and Outlays report for June:

Personal income decreased $222.8 billion (1.1 percent) in June according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $255.3 billion (1.4 percent) and personal consumption expenditures (PCE) increased $737.7 billion (5.6 percent).

Real DPI decreased 1.8 percent in June and Real PCE increased 5.2 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The June PCE price index increased 0.8 percent year-over-year and the June PCE price index, excluding food and energy, increased 0.9 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through June 2020 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was less than expected,  and the increase in PCE was at expectations.

This graph illustrates why reported GDP will increase in Q3.  Note the red line for Q2 (the quarterly level of PCE).   Even if PCE stayed at the June level in Q3, there would be a significant increase in Q3.