–Core PCE Px +0.3%, Pvt Wages +$14.1b vs +$26.4b in Apr;Savings Rt 5.0%
By Joseph Plocek
WASHINGTON (MNI) – The U.S. May Personal Income report raise the
risk that Q2 consumption will post an outright decline — it shows a
deadly combination of more savings and higher core prices that will
knock buying lower in the GDP accounts.
May Personal Income printed +0.3%, Personal Consumption
Expenditures flat (its worst showing since -0.6% in September 2009), and
PCE core prices +0.3% for +1.2% over the year. The last time core prices
were so high was October 2009, matching the +0.3%.
Spending was as expected at flat and prices a little higher than
expected, a bad combination. Real PCE therefore printed -0.1%, following
a similar -0.1% in April. This raises the possibility that Q2 real
consumption will decline.
Private wages advanced $14.1 billion, after +$26.4 billion in
April, as services pay slowed. Supplements, rents, income receipts and
government transfers gained. Proprietors’ income fell $1.7 billion as
farm income dropped and nonfarm printed -$0.4 billion. The former could
reflect flooding and other disasters.
Savings rebounded more than $20 billion, to its largest amount
since January 2011, leaving the savings rate at 5.0%, up 0.1 point. The
data suggest a more cautious consumer who saves rather than spends up
to his income.
Annual revisions are due with the next report due August 2 for all
the data.
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]
