U.S. Consumer Spending Climbed at Fastest Pace in Nearly Seven Years Consumer spending advanced at the fastest pace in nearly seven years in April—jumping 1.0%— in the latest sign the economy is improving after a sluggish start to the year.
Consumption had climbed 0.2% in February and was flat in March. (…)
Consumer spending on durable goods was particularly robust in April, likely reflecting healthy auto sales during the month.
Personal income, including earnings from wages and other sources, rose 0.4% in April. (…) The personal saving rate in April was 5.4%, down from March’s 5.9% and the lowest level of the year. (…)
The personal-consumption expenditures price index, the Fed’s preferred inflation measure, rose 0.3% in April from the prior month, the firmest reading since May 2015. From a year earlier, the index climbed 1.1%, undershooting the Fed’s 2% target for the 48th straight month.
So-called “core” prices, which exclude the volatile categories of food and energy, rose 0.2% from the prior month and 1.6% from a year earlier. (…)
Adjusted for inflation, consumer spending rose 0.6% and disposable personal income—income after taxes—rose 0.2%.
The FT this a.m.:
US consumer spending confirms rebound Buoyant household sentiment adds to case for interest rate rise
Sorry to interrupt the party. Just to warn on a few things:
- The consumer has yet to show clear trends, away from the on and off patterns of the last 2 years.
- Car sales were indeed strong in April but that was after a very bad March. Car sales remain in a clear downtrend looking at the last 6 months.
- April’s 1.0% jump in nominal expenditures is great but public retailers don’t seem to have noticed it.
- Revisions can be brutal. January was first released as +0.5%. It’s now +0.1%.
- Easter fell in March this year and there were 5 shopping weekends in April vs 4 in March. I am not sure the seasonal adjustments adjusted well for these anomalies. (Chart from Haver Analytics)
BTW, re. the “Buoyant household sentiment”:
And from Bespoke Investment:
U.S. Home Prices Jump as Supply Pinch Plays Out Home prices across the U.S. rose sharply in early spring amid rising demand and supply constraints, a sign that the lopsided housing-market recovery of the past five years is gaining strength.
The S&P/Case-Shiller national home-price index, released Tuesday, has clawed its way back to within 4% of its 2006 peak, a steep rise from the near 30% decline at the bottom in 2012. (…)
The S&P/Case-Shiller national index rose 5.2% in March. But that is mainly because of a lack of inventory, economists said. When adjusted for inflation the S&P/Case-Shiller index remains about 20% below its peak reached in 2006. (…)
The S&P/Case-Shiller index covering the 20 largest U.S. cities rose 5.4% in the 12 months ended in March, outpacing the overall market.
In the hottest regions in the country, primarily on the West Coast, prices rose at a double-digit pace in March, with Portland, Ore., reporting a 12.3% year-over-year gain, Seattle showing a 10.8% gain and Denver logging a 10% increase. (…)
Governments must boost spending to escape ‘low-growth trap’: OECD Ensnared in a “low-growth trap”, the world economy will meander along at its slowest pace since the financial crisis for a second year in a row in 2016, the OECD forecast on Wednesday, urging governments to boost spending.
BlackRock, the world’s largest asset manager has downgraded U.S. and European stocks to neutral, citing elevated U.S. valuations and the higher probability of a midyear interest-rate increase by the Federal Reserve. (…)
BlackRock would be more bullish if it saw evidence of reflation and an emphasis on expansionary fiscal policy and structural reform over monetary policy globally, Turnill says.