Personal Income: Spending Ticks Higher

Bottom Line: Personal income rose again in April, in-line with expectations, as spending was stronger than expected to start the 2nd Quarter. After a slower 1st Quarter, spending estimates were revised higher late in the quarter and accelerated into April as consumers began to feel the increase in take-home pay from tax cuts enacted earlier this year. Overall, income gains are steady to modestly higher while spending growth is moderate but accelerating again just slightly, suggesting very modest demand-driven inflation is likely in the coming quarters as core PCE remains below 2%. Personal Income ROSE by 0.3% in April, compared with market expectations for an increase of 0.3%. The prior month was revised lower from 0.28% to 0.24%. Personal Income is now 3.8% ABOVE its year ago level. Wages and Salaries ROSE by 0.4%, Wages are now 4.6% ABOVE year ago levels. Personal Tax Payments FELL by 0.5% and are now 2.9% ABOVE their year ago level, reflecting the year-on-year changes in employment and income. Disposable Income ROSE by 0.4% and is now 3.9% ABOVE its year ago level. Consumer Spending ROSE by 0.6%, compared with market expectations of an increase of 0.4% The prior month was revised higher. There were small increases in durable goods, modest increases in nondurable goods spending and modest increases in services spending. Spending is now 4.7% ABOVE its year ago level. The Saving Rate FELL by 0.20 points to 2.8%. The PCE Price Index ROSE by 0.2% and is now 2.0% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.2% and is now 1.8% ABOVE its year ago level. Real Consumer Spending ROSE by 0.4% and is now 2.7% ABOVE its year ago level. The April level is 2.7% annualized above its Q1 level.