WASHINGTON (MNI) - The U.S. April personal income data showed a surprising slowing in wages, part of which were saved, and real consumption that set up a slow Q2 GDP growth pace.
April Personal Income posted +0.3%, and Personal Consumption Expenditures -0.1%, worse than expected. PCE core prices were +0.2% for +1.4% over the year in a small bump-up.
The core price gain was the highest run-rate since March 2013, and came about as some favorable historical readings dropped out of the calculation. It remains to be seen whether rising rents and other necessities will bolster the inflation data for the entire year.
Private wages were up $16.9 billion after +$44.6 billion in March, so the underlying trend is gaining. But the income gain was the smallest since January on this slowing, which centered in services and manufacturing pay.Supplements, proprietors' income, rents, receipts on assets, and transfers were all higher. Savings rebounded to the February level, with the monthly savings rate of 4.0% back to about average. This lowered spending. Real spending was down 0.3%, its worst showing since September 2009, suggesting Q2 is off to a poor start. Still, Q2 real PCE is growing at about +1.7% SAAR, a modest gain. This means real GDP will slow unless there is massive rebound in spending over the balance of the spring. In Q1, real PCE advanced 3.1%.