Personal spending rises 0.5% as incomes dip 0.1%

WASHINGTON – U.S. personal consumption expenditures (PCE) increased 0.5 percent in April to $8.31 trillion after rising 0.4 percent in March, the U.S. Commerce Department’s Bureau of Economic Analysis reported today.
Real consumer spending – adjusted for price changes – increased 0.2 percent after rising less than 0.1 percent in March. The increase lagged the 0.4-percent median forecast of 74 economists surveyed by Bloomberg News.
The PCE price index rose 0.3 percent in April to 116.7 points (2000 = 100) after rising 0.4 percent in March. The core index excluding food and energy – closely watched by the Federal Reserve Board – increased 0.1 percent to 113.7 points after rising less than 0.1 percent in March. The Bloomberg survey had anticipated a gain of 0.2 percent.
Personal income from all sources declined 0.1 percent in April to $11.4 trillion, after rising 0.8 percent in March. The Bloomberg survey had predicted a rise of 0.3 percent. Wages and salaries decreased by 0.5 percent to $6.3 trillion after increasing 0.7 percent in March.
Real personal disposable income – the after-tax income available for spending or saving, adjusted for price changes – decreased 0.4 percent in April to $9.9 trillion after rising 0.3 percent in March.
“The consumer is just not collapsing,” Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago, told Bloomberg. “Consumer spending will not shoulder all the burden of growth going forward but it continues to be resilient.”
The downside, however, was seen in the U.S. personal savings rate. Personal savings – disposable income minus personal spending – worsened to a negative 1.3 percent of disposable income (-$132.8 billion) from March’s negative 0.7 percent (-$67.8 billion), as spending rose, incomes fell and consumers continued to borrow or spend down savings.
Additional information, including the 12-page Personal Income and Outlays news release, is available from the U.S. Department of Commerce’s Bureau of Economic Analysis at www.bea.gov.