Personal Income: Modest Income and Spending Gains

Bottom Line: Both personal and disposable income rose modestly in March. Meanwhile, real consumer spending was unchanged and increased by 1.9% in Q1 annualized compared to Q4 as highlighted in the GDP report yesterday. Finally, consumer inflation rose modestly year-over-year but is slightly lower than the last months' year-over-year growth. Personal Income ROSE by 0.4% in March, compared with market expectations for an increase of 0.3%. The prior month was revised lower from 0.2% to 0.1%. Personal Income is now 4.2% ABOVE its year ago level. Wages and Salaries ROSE by 0.4%. Both private payrolls and government wages and salaries increased modestly. Wages are now 4.7% ABOVE year ago levels. Personal Tax Payments ROSE by 0.3% and are now 5.9% ABOVE their year ago level, reflecting the year-on-year rebounds in employment and income. Disposable Income ROSE by 0.4% and is now 4.0% ABOVE its year ago level. Consumer Spending ROSE by 0.1%, compared with market expectations of an increase of 0.3%. The prior month was revised higher from 0.1% to 0.2%. There was a modest decline in durable goods but modest increases in nondurable goods and services spending. Spending is now 3.5% ABOVE its year ago level. The Saving Rate ROSE by 0.3 points to 5.4%. The PCE Price Index ROSE by 0.1% and is now 0.8% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.6% ABOVE its year ago level. Core consumer inflation had been on a slowing trend until October 2015 but is now rising modestly. Real Consumer Spending was UNCHANGED and is now 2.6% ABOVE its year ago level. The Q1 spending average was 1.9% annualized above its Q4 level.