EmailNominal personal spending was flat in May after increasing a downwardly revised 0.3% (from 0.4%) in April. The Briefing.com consensus expected personal spending to increase 0.1%.
Goods consumption declined 0.7%, significantly more than the 0.2% drop implied by the retail sales report. The difference was mostly due to a bigger decline in motor vehicle and parts (-4.6% vs. -2.9%) in the spending data, which was more in-line with the motor vehicle sales levels.
Services consumption increased 0.4% in May.
Elevated inflation rates pulled real spending growth into negative territory.
Real personal spending declined 0.1% for the second consecutive month. That is the first back-to-back decline in that measure since March and April 2009.
Versus the first quarter average, real PCE is only up 0.5% in the second quarter. This is well below the 3.0% real consumption growth that most economists expected at the beginning of April.
Personal income increased 0.3% in May, the same rate as in April. The Briefing.com consensus expected personal income to increase 0.4%.
The increase in income matched the earnings gains from the May employment report.
