US Personal Consumption Rises the Most in 5 Months


Personal spending in the United States increased 0.6 percent month-over-month in April of 2018 after an upwardly revised 0.5 percent gain in March and beating market expectations of a smaller 0.4 percent gain. It is the biggest increase in personal spending in five months, mainly boosted by a rebound in consumption of nondurable goods.

Personal consumption expenditures (PCE) increased $79.8 billion or 0.6 percent. Spending on nondurables rebounded (0.9 percent compared to -0.1 percent in March) while consumption of durables (0.3 percent compared to 1.6 percent) and services (0.5 percent compared to 0.6 percent) eased. 

Real PCE increased 0.4 percent or $42.8 billion, reflecting an increase of $15.4 billion in spending for goods and a $27.5 billion increase in spending for services. Within goods, spending for gasoline and other energy goods was a leading contributor to the increase. Within services, the largest contributor was spending for household utilities.

Personal income went 0.3 percent or $49.5 billion, slightly higher than a downwardly revised 0.2 percent gain in March and in line with expectations. It primarily reflected increases in wages and salaries, in personal interest income, and in government social benefit payments to persons, specifically veteran’s benefits and Medicare. 

Personal outlays increased $86.9 billion in April. Personal saving was $419.6 billion in April and the personal saving rate, personal saving as a percentage of disposable personal income, was 2.8 percent. 

Disposable personal income (DPI) increased $60.9 billion or 0.4 percent and real DPI edged up 0.2 percent.

The personal consumption expenditures (PCE) price index increased 0.2 percent month-over-month after being unchanged in March and beating market forecasts of a flat reading. Cost of goods went up 0.4 percent, rebounding from a 0.5 percent drop in March, boosted by nondurables (0.5 percent compared to -0.5 percent) while prices of durables was unchanged (compared to -0.3 percent in March). Cost of services rose 0.2 percent , slightly below 0.3 percent in March. Excluding food and energy, PCE prices also went up 0.2 percent, the same as in each of the previous two months and above market forecasts of 0.1 percent. On the year, the PCE price index rose 2 percent, the same as in March. The core index rose 1.8 percent, also the same as in the previous month. The core PCE index is the Federal Reserve's preferred inflation measure. The central bank has a 2 percent inflation target.

US Personal Consumption Rises the Most in 5 Months


BEA | Joana Taborda | joana.taborda@tradingeconomics.com
5/31/2018 3:37:08 PM