9/28/2012 9:19 AM ET (RTTNews) - While the Commerce Department released a report Friday morning showing that U.S. personal income was nearly flat in the month of August, personal spending still showed a notable increase amid the recent jump in gas prices.

The report said personal income inched up by 0.1 percent in August, matching the downwardly revised increase reported for July. Economists had expected income to edge up by 0.2 percent compared to the 0.3 percent growth originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, also edged up by 0.1 percent, in August following a matching increase in the previous month.

When adjusted to remove price changes, disposable personal income actually fell 0.3 percent in August compared to a 0.1 percent increase of in July.

At the same time, the Commerce Department said personal spending increased by 0.5 percent in August compared to a 0.4 percent increase in July. The spending growth matched economist estimates.

The increase in spending was largely due to the higher gas prices, however, and spending edged up by just 0.1 percent when adjusted to remove price changes.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "The U.S. personal income and spending data for August are worse than the headline figures suggest and indicate that subdued jobs growth is hitting incomes."

"As long as real spending is flat in September, annualized real consumption growth in the third quarter will match the second quarter's 1.5 percent," he added. "A 0.4% m/m increase in September would be needed to get up to 2.0%."

Dales said the weaker performance of income was even more worrying, noting that it casts some doubt over the outlook for consumption.

With spending rising at a faster pace than income, the report also showed personal saving as a percentage of disposable personal income was 3.7 percent in August compared with 4.1 percent in July.

Link:
U.S. Personal Spending Rises 0.5% Amid Higher Gas Prices