U.S. Consumer Spending Is Surprisingly Strong in April

Personal consumption expenditures (PCE) increased 0.8% (6.7% y/y) in April following 0.1% upticks in each of the prior two months. March was revised from no change but February was unrevised. A 0.4% increase had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, real consumer spending on good & services increased 0.5% (2.3% y/y) last month after little-change in March.

Outlays on durable goods recovered 1.4% (2.6% y/y) adjusted for price change during April following declines of 1.1% in each of the prior two months. Real spending on motor vehicle & parts improved 2.2% last month (4.2% y/y) after falling sharply in both of the prior two months. Real spending on furniture & appliances improved 1.3% (2.1% y/y) after falling sharply for two straight months. Real spending on recreational goods & vehicles rose 1.1% (4.0% y/y) in April after two months of moderate decline.

Spending on nondurable goods rose 0.4% in real terms in April (0.8% y/y) after a 0.2% March decline. Apparel spending fell 0.2% (-0.4% y/y) in real terms last month after two straight 1.4% shortfalls. Outlays on gasoline & other energy products weakened 0.6% last month (+2.2% y/y) following two months of sharp increase. Real food & beverage outlays rose 0.3% (-0.9% y/y) and reversed the March decline.

Real spending on consumer services rose 0.3% (2.7% y/y) during April after a 0.2% increase. Recreation services buying surged 1.3% (3.6% y/y) following two consecutive months of 0.6% decline, while real food services and accommodations edged 0.1% higher (2.1% y/y) following a 0.4% decline. Real transportation services outlays surged 1.3% (0.4% y/y) following a 0.7% decline while real housing & utilities expenditures eased 0.2% (+0.6% y/y) after rising 0.9% in March. Real healthcare spending gained 0.2% (5.9% y/y) after a 0.4% increase. Financial services & insurance expenditures surged 1.1% (3.1% y/y) after holding steady in March.

Personal income rose an expected 0.4% (5.4% y/y) in April after two straight 0.3% increases. The gain reflected a 0.5% increase (5.6% y/y) rise in wages & salaries which followed a 0.3% increase in March. Proprietors' income fell 0.4% (+3.1% y/y) last month following 0.1% declines in both of the prior two months. Rental income strengthened 1.5% (14.0% y/y) after two straight months of 1.4% increase. Receipts on assets rose 1.0% (6.3% y/y) after a rise of 0.4% in March as interest income surged 1.3% (8.1% y/y) and dividend income rose 0.7% (4.3% y/y). Personal transfer receipts fell 0.4% (+4.4% y/y) in April after a 0.1% March uptick.

Disposable income rose 0.4% (7.9% y/y) last month following a 0.3% rise in March. Taxes held steady (-8.8% y/y), after six months of decline. Real disposable earnings were unchanged (+3.4% y/y) last month following a 0.2% gain in February.

The personal saving rate fell to 4.1% in April from 4.5% in March. The level of personal savings declined 8.7% (+23.2% y/y) after rising 5.2% in March.

The PCE chain price index increased 0.4% (4.4% y/y) in April following a 0.1% gain. The core index excluding food & energy prices also rose 0.4% (4.7% y/y) after rising 0.3% in March. Goods prices rose 0.3% (2.1% y/y) following a 0.2% decline while services prices gained 0.4% (5.5% y/y) following a 0.3% rise. The PCE services price index excluding energy & housing increased 0.4% (4.5% y/y) after a 0.3% March increase. Energy prices rose 0.7% (-6.3% y/y) in April following a 3.7% drop while food prices eased slightly (+6.9% y/y) after falling 0.2% in March.

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.