Personal Spending Outpaced Income Gains in April

Economy

Published: May 31, 2016 9:10 am

Last Updated: January 13, 2020 7:24 am

Personal income and consumer spending posted gains for the month of April. Personal income rose by 0.4% in April, meeting the consensus expectations from both Bloomberg and Dow Jones.

Where the surprise was seen was in consumer spending, which rose to 1.0% in April. Consensus estimates from both Bloomberg and Dow Jones had called for a gain of only 0.7%. The U.S. Department of Commerce said that this was the biggest jump in spending going back to 2009.

The personal consumption expenditures (PCE) price index was up 0.3% on the monthly reading, while the core PCE price index was up only 0.2% on the monthly reading.

Annual inflation on pricing is still well under the Federal Reserve’s hopeful 2.0% to 2.5% readings. The PCE price index was up 1.1% on the headline data from April of 2015. The larger pop in the annual reading was in the core PCE, at a gain of 1.6% over April 2015.

Strength continued in vehicle sales and durable goods, but even non-durable goods saw a 1.4% gain. Spending for services was up 0.6%.

If you wonder how income is up 0.4% while spending was up 1.0%, that is because consumers tapped into savings. The savings rate was down 0.5% to 5.4%.

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