A new report from the U.S. Department of Commerce showed that personal income for Americans rose by 0.3 percent in March. That is slightly worse than expected but still the 9th monthly gain in a row. During this same period consumer spending, which accounts for more than two-thirds of the economy (GDP), lifted by 0.4 percent.
That is the largest increase since December and suggests that the pullback in consumption following the strong holiday shopping season was only temporary. Moreover, Americans’ personal saving rate fell to 3.1 percent last month, helped by recent tax cuts and expectations for bigger paychecks. In real terms, though, annual growth in both income and spending continued to slow in March, as the core personal consumption expenditures (PCE) price index rose by another 0.2 percent. On a year-over-year basis this preferred measure of household inflation for the Federal Reserve is now up 1.9 percent, the highest reading since January 2017 and fractionally below FOMC members’ 2.0 percent “target.”
Sources: Econoday, U.S. DoC, The Conference Board, FRBSL
Post author: Charles Couch