U.S. Personal Spending Strengthens While Savings Are Reduced

Personal consumption expenditures increased 0.6% during April (4.7% y/y) following a 0.5% March rise, revised from 0.4%. It was the strongest monthly increase since November. A 0.4% rise had been expected in the Action Economics Forecast Survey.

Real personal spending rose 0.4% (2.7% y/y) after a 0.5% gain. In constant dollars, durable goods spending improved 0.3% (6.8% y/y) after a 1.9% jump. A 0.5% gain in purchases of motor vehicles & parts followed a 4.6% surge, but outlays on home furnishings & appliances declined 0.7% (+6.6% y/y) and retraced half of the March strengthening. Purchases of recreational goods & vehicles fell 0.2% (+3.4% y/y), down for the second straight month. Outlays on nondurable goods rose 0.4% (2.8% y/y) for the second consecutive month. Clothing & footwear purchases gained 0.5% (1.6% y/y) after a 1.0% jump while gasoline & oil buying surged 1.7% (1.5% y/y) as it did in March. Spending on food & beverages eased 0.2% (+2.9% y/y) following a 0.4% gain. Services spending rose 0.4% (2.0% y/y) after a 0.3% rise. Housing & utilities outlays surged 0.9% (2.0% y/y) for a second straight month while spending on recreation services jumped 1.3% (2.2% y/y) after a 0.2% gain. Health care outlays gained 0.1% (1.9% y/y) after two straight months of moderate decline while outlays at restaurants & hotels fell 0.3% (+1.5% y/y).

Personal income rose an expected 0.3% (3.8% y/y) following a 0.2% rise. Wages & salaries improved 0.4% (4.6% y/y) after a 0.2% rise. Proprietors income inched 0.1% higher (3.8% y/y) after a 0.3% rise and rental incomes improved 0.3% (4.2% y/y) following a 0.6% gain. Personal interest income gained 0.4% (2.9% y/y) after declining for three straight months while dividend payments held steady (+4.0% y/y) after rising 0.8%. Transfer receipts increased 0.3% (3.1% y/y) following a 0.4% gain. Social security payments inched 0.1% higher (4.9% y/y) after a 1.0% strengthening. Medicare payments rose 0.5% (3.1% y/y), the strongest monthly increase in three years and Medicaid payments ticked 0.1% higher (4.0% y/y) following a 0.3% rise. Unemployment insurance payments declined 1.9% (-8.7% y/y). Veterans benefits strengthened 3.7% and doubled the y/y increase to 10.9%.

Disposable income increased 0.4% (3.9% y/y after a 0.2% rise. Real disposable income increased 0.2% (1.9% y/y) for a second straight month.

The strength in spending, accompanied by lesser income growth, reduced the personal savings rate to 2.8%. It was the lowest level since December, and half of what it was as recently as 2016. Personal savings declined 20.0% y/y.

The chain type price index increased 0.2% (2.0% y/y) following stability in March. The index excluding food & energy rose 0.2% (1.8% y/y) for the third straight month. Energy prices surged 1.5% (8.4% y/y) after a 2.8% decline and food prices rose 0.3% (0.5% y/y) following a 0.2% gain.

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figure is in the AS1REPNA database.