U.S. consumers making less money: Capital Economics

The real estate market over the summer made some positive gains with prices and sales ticking upward, but the month of August shows consumers pinched for pennies and losing ground when it comes to their income levels.

With income playing a key role in homebuyer confidence, the latest report is not good news for the real estate economy.

Nominal incomes in the U.S. ticked up just 0.1% month over month in August, Capital Economics said Friday. Meanwhile, July’s income increase of 0.3% was revised down to 0.1%, suggesting lower earnings than initially expected for the mid-summer month.

Meanwhile, real spending among consumers only grew 0.1% from July to August. Nominal personal spending rose 0.5% from July to August, but that increase was caused by a sharp uptick in gas prices.

“Even if real disposable income rebounded by 0.3% in September, annualised growth in the third quarter would be just 1%, down from 3.1% in the second. This would not be a solid foundation for stronger spending,” Capital Economics said.

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