U.S. Personal Spending Growth Slows in April; Core Price Gain Cools

Personal consumption expenditures (PCE) increased 0.2% (5.3% y/y) during April following two consecutive months of 0.7% increase, both revised from 0.8%. A 0.3% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE eased 0.1% last month (2.6% y/y) following a 0.4% March increase.

Real spending on durable goods eased 0.1% last month (+2.1% y/y) after increasing 0.2% in March, revised from 0.9%. Real spending on motor vehicles improved 1.4% (-3.8% y/y) after falling 0.9%. Real home furnishings & appliance outlays edged 0.1% higher (3.2% y/y) after rising 0.2% in March while real spending on recreational goods & vehicles declined 1.3% (+6.5% y/y) after rising 1.5% in March. Spending on other durable goods fell 1.1% (+6.8% y/y) after holding steady in March.

Real spending on nondurable goods eased 0.5% (+1.8% y/y) last month after an unrevised 1.3% increase in March. Real clothing and footwear purchases were down 1.0% (+1.2% y/y), off for the third consecutive month. Real food & beverage buying rose 0.2% (1.8% y/y) after strengthening 1.0% in March. Real outlays on gasoline & other energy products fell 2.5% (-1.9% y/y) after rising 5.1% in March. Spending on other nondurable goods weakened 0.5% (+3.0% y/y) following a 1.3% rise.

Real spending on services edged 0.1% higher (2.9% y/y) in April following a 0.2% March gain, revised from 0.5%. Real spending on housing & utilities rose 0.2% (1.2% y/y) after holding steady in March while real healthcare spending rose 0.4% (5.3% y/y) after rising 0.6%. Real spending on food services & accommodations eased 0.1% (+3.0% y/y), the same as in March while real spending on financial services & insurance rose 0.2% last month (2.7% y/y), about the same as in March. Real spending on transportation services fell 0.7% in April (+2.8% y/y) after declining 0.6% in the prior month.

Personal income rose an expected 0.3% in April (4.5% y/y) after an unrevised 0.5% March increase. Wages & salaries rose 0.2% (4.9% y/y) after a 0.6% gain. Rental income edged 0.1% higher (8.3% y/y) after strengthening 1.5% in March, and proprietors’ income held steady (+4.0% y/y) after two straight months of 0.2% increase. Income from assets improved 0.5% (2.3% y/y) after holding steady in March and current transfer receipts rose 0.3% (4.7% y/y) after rising 0.8% in March. Government social benefits rose 0.3% (4.6% y/y) after strong gains in each of the prior three months.

Disposable personal income increased 0.2% (3.7% y/y) in April following an unrevised 0.5% March rise. After adjusting for price changes, disposable income eased 0.1% (+1.0% y/y) last month after little change in the prior two months.

The personal saving rate held steady at 3.6%, after March was revised from 3.2%. The rate was down from a May 2023 high of 5.3%. Personal saving slipped 0.3% (-28.6% y/y) after falling 5.0% in March and to 8.1% in February.

The PCE chain price index rose 0.3% (2.7% y/y) in April, the same as it did in March and February. These increases were up from minimal monthly changes during the fourth quarter of last year. The price index excluding food and energy rose 0.2% (2.8% y/y) following two consecutive 0.3% increases, but these were below a 0.5% January rise. Goods prices rose 0.2% last month (0.1% y/y) after edging 0.1% in March. Services prices rose 0.3% (3.9% y/y) following a 0.4% increase. Services prices excluding energy & healthcare increased 0.4% (4.4% y/y) after rising 0.5% in March. Food prices eased 0.2% (+1.3% y/y) last month after little change in March. Energy goods & services prices rose 1.2% (3.0% y/y), the same as in March, after a 2.3% February strengthening.

The personal income and consumption figures are available in Haver’s USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.