Personal Income & Expenses Report

Personal income increased 1.3% (due to government stimulus) in May, but it went down 1.3% in June because stimulus impact withers in course of time. Economic analysts had forecast 1% decrease in personal income. Because of the dull job market, personal incomes will be on the down trend for some time.

Personal spending increased 0.1% in May while in June there was 0.4% increase. Analysts predicted 0.3% increase. But, when inflation was taken into consideration personal spending fell by 0.1% in June. According to government report, the spending decreased 1.2% in the 2nd quarter but in the 3rd quarter consumer spending may increase.

Personal saving was 6.2% in May whereas in June it was 4.6%. We can look forward that savings rate will rise as consumers spend less and recover from the recession.

• Fewer jobs
• Less income
• Increased debts
• Inability to pay the debts

Consequently, there were 126,434 consumer bankruptcy filings in July 2009. This is 34.3% more than in July 2008 and 8.7% more than in June 2009. By the end of this year, the number of bankruptcy filings will be higher than the present. This trend implies increasing financial stress on US consumers and continues till the year end. Without jobs and with previous debts lead to bankruptcy.

The present unemployment rate of 9.5% is the highest since 1983. This rate is likely to go up to 9.6%. The incomes of the employed do not increase. According to one government report, spending increased 0.4%.

28.3% of July bankruptcy filings were Chapter 13 cases. According to Chapter 13, the debtor agrees to a revised schedule of repayment of his debts. In Chapter 7 filing, the debts are written off. Many consumers resort to Chapter 7 bankruptcy filing.