U.S. personal income growth likely to have come in at 0.3 pct in June, inflation to have softened again

U.S. personal income growth is likely to have slowed down marginally in June. In the months of April and May, personal income growth had accelerated to 0.3 percent and 0.4 percent, respectively. The continued rate of job growth has aided in maintaining momentum behind income growth since the start of the year.

Significantly, for the prospects for real consumer spending growth is real disposable income, which rose 0.6 percent in May. The low inflation environment that has remained over the last few months has aided in lifting discretionary income for consumers. The headline PCE deflator has dropped in two of the last three months.

On a year-on-year basis, the headline deflator rose just 1.4 percent. Inflation is expected to come in soft again in June with a flat reading, noted Wells Fargo in a research report. Also, personal income growth is expected to have come in at 0.3 percent in June, which underpins the case for continued gains in real consumer spending in the second half of the year, added Wells Fargo.

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