Personal Spending Outpaced Income Gains in April
Personal income and consumer spending posted gains for the month of April. The U.S. Department of Commerce said that consumer spending saw the biggest jump going back to 2009.
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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.
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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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Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
