Personal income rose while spending flatlined in April and prices rose less than expected.
The latest report on personal income and spending showed income rose 0.4% in April while personal spending was flat.
PCE, a measure of inflation, rose 0.1% over the prior month and 1.2% over the prior year on a “core” basis. The PCE deflator showed prices were flat in April compared to the prior month and rose just 0.1% over a year earlier.
Expectations were for the report to show personal income rose 0.3% in April while spending edged up 0.2%. In March, personal income was flat while spending rose 0.4%.
“Core” PCE, which excludes the more volatile cost of food and energy and is one of the Fed’s preferred inflation measures, was expected to show prices rose 0.2% over the prior month in April and 1.3% over the prior year.
The PCE deflator, which is the headline number that includes food and gas, was expected to show prices rose 0.1% over the prior month and 0.2% over the prior year.
In a note to clients following the report, economists at Capital Economics wrote, “The April income and spending figures are another reminder that even though their incomes are rising at a healthy pace, households are still reluctant to boost spending more freely.”
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