Economist's Commentary: August 4, 2008

Quick Take on the Economy: August 4, 2008

By Lawrence Yun, NAR Chief Economist

Country's total income rose 0.1 percent in June. It is higher than a year ago by 5.7 percent.
The wage and salary disbursements by private companies rose by 0.2 percent over the month and by 4.3 percent from a year ago. This measure better shows the underlying economic trend in the market place as it does not take government tax rebate checks and transfer payments into account.
Disposable income per person - that is, after subtracting away taxes - rose 6.6 percent from a year ago thanks to the tax rebate checks. Without the rebate checks, income would have been up by only 3 percent.

Consumer spending advanced 0.6 percent in June. It is higher by 5.3 percent than one year ago.
Income outgrew spending, thereby keeping the savings rate on positive grounds. The personal savings rate was 2.4 percent in June. It had been less than one percent in the three prior years.
The stronger than expected consumer spending raises our third quarter GDP forecast to 1.9 percent, but lowers fourth quarter GDP as the impact of the tax rebate checks will largely dissipate by the end of the year.

Consumer spending continues to be resilient despite weak job market conditions. Tax rebate checks help shore up consumers' finances temporarily.
The Federal Reserve meets tomorrow, but expect no change in the monetary policy as a result of the sluggish economic growth through the end of the year.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >