April Personal Income And Spending (And PCE Inflation)

2025-05-30 11:02:00 ET

Summary

• The April report on personal income and personal consumption expenditures (PCE) showed strong income gains.
• This was certainly good news, especially for inflation, for April – but these data are mostly pre-tariff.
• The Federal Reserve will certainly be pleased with today’s figures, as it shows slowing inflation and a still growing economy (and solid income gains).

By David W. Berson, Ph.D.

A favorable view on income and inflation.

The April report on personal income and personal consumption expenditures (PCE) showed strong income gains (up by 0.8 percent, well above expectations), but some slowing in consumer spending (up by 0.2 percent, as expected). The key inflation figures were unambiguously very positive, with the overall price index for PCE and the core PCE (removing the volatile food and energy components) both up by only 0.1 percent for April – slow gains but up a tad from the prior month’s unchanged readings. The 12-month trend rates, however, slipped a bit to 2.1 percent for the overall PCE and 2.5 percent for the core. While these are both still slightly above the Fed’s 2.0 percent long-term goal, they are closer....

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