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Economy in Brief

U.S. Consumer Spending Slows in April after March Bulge
by Carol Stone  May 30, 2014

Consumer spending pulled back in April by 0.1% after surging 1.0% in March, revised from the 0.9% initially reported; April's amount is up 4.3% y/y. A 0.2% rise was expected in the Action Economics Forecast Survey. Outlays on durable goods, which had been up 3.6% in March, fell back by 0.5% in April (+4.1% y/y); motor vehicles, home furnishings and recreational goods were all down. Spending on nondurable goods edged up 0.1% in the month (4.1% y/y) following March's 0.4%. Services outlays fell 0.1% (+4.4% y/y) after an outsized 0.8% increase in March. Among services, housing & utilities and food services & accommodations both experienced surges in March and outright declines in April. Adjusted for inflation, PCE fell 0.3% in April (+2.7% y/y), following a sizable 0.8% rise in March.

Personal income rose 0.3% (3.6% y/y) in April, following 0.5% in March, which was unrevised. April's outcome was in line with forecast expectations. Disposable personal income paralleled with a 0.3% rise (3.6% y/y), also following 0.5% in March. Wages & salaries advanced 0.2% (3.7% y/y) in April after 0.6% the prior month. Interest income recovered by 0.3% (2.6% y/y) following three successive small monthly declines. Dividends rose 1.4% in April, similar to March's 1.1% and up 6.6% y/y. Proprietors' income was up 0.4% (+1.5% y/y) and rental income 0.3% (5.3% y/y). Government social benefit transfer payments just edged up 0.1% (4.4% y/y), following three sizeable monthly increases in January, February and March. Social security slowed in April and Medicaid declined outright, but Medicare firmed after being flat in March. Unemployment benefits are continuing their downtrend, falling 4.1% in April after 2.6% in March; the year-on-year move is -44.9%, reflecting the expiration of the emergency benefits program at the end of December. Adjusted for price inflation, disposable personal income rose 0.2% in April (2.0% y/y) following three straight months of 0.3% gains.

With the moderate gain in income and the slowing in spending in April, the personal saving rate recovered to 4.0% from March's low 3.6%. The total amount of personal saving came back up 11.6% for April, but was still down 9.0% y/y.

The PCE chain price index increased 0.2% (1.6% y/y), the same as in March. The price index excluding food & energy also rose 0.2% (1.4% y/y).

The personal income & consumption figures are available in Haver's USECON and USNA databases. The consensus expectation figure is in the AS1REPNA database.

Personal Income & Outlays (%) Apr Mar Feb Y/Y 2013 2012 2011
Personal Income 0.3 0.5 0.4 3.6 2.8 4.2 6.1
  Wages & Salaries 0.2 0.6 0.3 3.7 3.1 4.3 4.1
Disposable Personal Income 0.3 0.5 0.4 3.6 1.9 3.9 4.8
Personal Consumption Expenditures -0.1 1.0 0.6 4.3 3.1 4.1 5.0
Personal Saving Rate 4.0 3.6 4.1 4.6
(Apr '13)
4.5 5.6 5.7
PCE Chain Price Index 0.2 0.2 0.1 1.6 1.1 1.8 2.4
  Less Food & Energy 0.2 0.2 0.1 1.4 1.2 1.8 1.4
Real Disposable Income 0.2 0.3 0.3 2.0 0.7 2.0 2.4
Real Personal Consumption Expenditures -0.3 0.8 0.5 2.7 2.0 2.2 2.5
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