US DATA: Apr Personal Income +0.4%, PCE +0.4% and PCE core px +0.2% for
+1.0% YOY. Real PCE eked out +0.1%, a slow start to Q2. Pvt wages
+$27.3B vs +$20.6B in Mar as services payrolls jumped. Supplements,
proprietors’ income, rents, income receipts, and transfers all gained.
This shows the problem is not in income, but rather in inflation’s
effects. Real spending dropped in Mar on goods and ‘rebounded’ to flat
in Apr, while services spending posted just +0.1% in Apr. With lower oil
prices, there is a chance May spending will improve. Savings rate was
4.9% in Apr, same as in Mar, but a low since late 2008. Personal savings
were $570.6b, the lowest since Aug’09, so higher prices also forced the
consumer to spend more to stay even, and to save less.