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Economy in Brief
U.S. FHFA House Prices Continued to Rise in April
The FHFA House Price Index increased 1.6% during April...
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The advance estimate of the U.S. international trade deficit in goods narrowed to $104.3 billion in May...
U.S. Energy Prices Decline
The AAA retail price of gasoline fell seven cents to $4.94 per gallon (+60.4% y/y) in the week ended June 24...
French Consumer Worries Intensify in the Wake of Russia Attack
French confidence is weak in June 2022...
U.S. Durable Goods Orders Firm in May
Manufacturers' new orders for durable goods exhibited unexpected improvement in May...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller May 28, 2021
• Spending on goods weakens broadly; services purchases rise.
• Increase in core prices hits twenty-year high.
• Total take-home earnings decline but wages surge.
Personal consumption expenditures increased 0.5% during April (28.5% y/y) following a 4.7% March increase, revised from 4.2%. A 0.5% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation spending eased 0.1% (26.0% y/y) after rising 4.1%. The weak gain in outlays reflected a 0.9% decline (+66.2% y/y) in outlays on durable goods. The decline was paced by a 1.7% weakening (+50.6%) in spending on home furniture & appliances after rising 9.0% in March. Spending on recreational goods & vehicles also fell 1.7% (+43.6% y/y) after a 12.2% March gain. To the upside, motor vehicles & parts purchases rose 1.6% (88.9% y/y) after gaining 19.8%. Nondurable goods spending fell 1.6% (+19.5% y/y) after surging 6.1% in March. Clothing spending weakened 3.6% last month, but roughly doubled y/y, after a 16.3% rise. Food & beverage sales fell 2.0% (+5.0% y/y) after rising 3.4% while spending on gasoline edged 0.3% higher (41.8% y/y). Working 0.6% higher (19.3% y/y) were real outlays on services after a 1.6% March surge. Restaurant & hotel spending strengthened 2.2% (93.3% y/y) after jumping 11.8% in the previous month.. Recreation services outlays rose 6.2% (102.3% y/y) as they did the month before. Transportation service outlays eased 0.7% (+62.5% y/y) after rising as 8.3% when travel restrictions were eased. Health care outlays improved 0.5% (46.5% y/y) and housing & utilities spending improved 0.3% (0.9 % y/y).
The PCE chain price index increased 0.6% (3.6% y/y) last month, the same as in March. The price index excluding food and energy surged 0.7% (3.1% y/y) after rising 0.4%. It was the strongest monthly increase since October 2001. Durable goods prices rose 1.4% (5.2% y/y) while nondurable costs improved 0.3% (4.1% y/y). Services prices rose an elevated 0.5% (3.1% y/y) for the second straight month. Energy prices eased 0.2% (+24.8% y/y) after four strong monthly gains. Food & beverage prices rose 0.3% (0.9% y/y) after two 0.2% gains.
Personal income weakened 13.1% (+0.5% y/y) after a record 20.9% March surge, revised from 21.1%. A 15.0% decline had been expected. Transfer payments fell 41.4% following March's $1,400 federal government stimulus payments to most individuals. Wages & salaries strengthened 1.0% (16.4% y/y) for a second straight month with gains in payroll employment. Proprietors' income surged 3.2% (30.5% y/y) after strengthening 6.5% in March. Rental income rose 0.5% (2.7% y/y) following a 0.8% gain. Earnings on assets rose 0.5% (-0.7% y/y) as dividend income rose 1.0% (-2.1% y/y) and interest income improved 0.2% (0.3% y/y). Disposable personal income fell 14.6% (-1.0% y/y) last month after rising 23.4% in March. Adjusted for price inflation, disposable income fell 15.1% (-4.4% y/y) after a 22.7% March strengthening.
The personal savings rate declined to 14.9% in April from 27.7% in March. The rate reached a record high 33.7% in April of last year. The level of personal saving fell by roughly one-half in April both m/m and y/y.
The personal income and consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figures are in the AS1REPNA database.
Personal Income & Outlays (%) | Apr | Mar | Feb | Apr Y/Y | 2020 | 2019 | 2018 |
---|---|---|---|---|---|---|---|
Personal Income | -13.1 | 20.9 | -6.9 | 0.5 | 6.3 | 3.9 | 5.3 |
Wages & Salaries | 1.0 | 1.0 | 0.1 | 16.4 | 0.7 | 4.7 | 5.0 |
Disposable Personal Income | -14.6 | 23.4 | -7.8 | -1.0 | 7.2 | 3.7 | 5.8 |
Personal Consumption Expenditures | 0.5 | 4.7 | -1.0 | 28.5 | -2.7 | 3.9 | 4.9 |
Personal Saving Rate | 14.9 | 27.7 | 14.7 | 33.7 (Apr '20) | 16.4 | 7.5 | 7.8 |
PCE Chain Price Index | 0.6 | 0.6 | 0.3 | 3.6 | 1.2 | 1.5 | 2.1 |
Less Food & Energy | 0.7 | 0.4 | 0.1 | 3.1 | 1.4 | 1.7 | 2.0 |
Real Disposable Income | -15.1 | 22.7 | -8.1 | -4.4 | 6.0 | 2.2 | 3.6 |
Real Personal Consumption Expenditures | -0.1 | 4.1 | -1.3 | 24.0 | -3.9 | 2.4 | 2.7 |