Consumption Up On Higher Inflation; Manufacturing, Jobs Stalled

A number of key economic figures were released this morning by the Commerce Department.

First, Consumer spending rose 0.4% in March, ahead of the 0.3% consensus due chiefly to inflation, which also came in ahead of estimates at 0.2% vs. the 0.1% consensus. Adjusting for inflation, consumer spending rose only 0.1%. Bloomberg:

Today’s figures also showed that the Federal Reserve’s preferred measure of consumer prices rose more than anticipated, underscoring an emerging threat from inflation. Fed policy makers yesterday signaled they are ready to pause their series of interest-rate cuts as some former officials warn about stoking price pressures.

“Inflation continues to take a pretty big bite out of consumers’ spending power,” said Christopher Low, chief economist at FTN Financial in New York. “Consumers are likely to continue to spend at a very slow pace.”

Second, jobs also disappointed. Claims for unemployment insurance rose to 380,000, well ahead of the 360,000 consensus.

Third, on a positive note, manufacturing activity remained unchanged, beating estimates. The Institute for Supply Management’s manufacturing index stayed at 48.6, versus consensus of 48.

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