U.S. Consumer Spending Signals Second-Quarter Rebound On Track

singapore Consumer PricesShoppers perusing through products on the shelves of Mustafa Centre's supermarket.
  • U.S. Consumer Spending Signals Second-Quarter Rebound On Track

The consumer is on track for a second-quarter comeback after a weak stretch at the start of the year, as Americans kept up spending in line with income gains in April, Commerce Department figures showed Tuesday.


  • Purchases increased 0.4% m/m (matching est.), most since December, after 0.3% rise in March
  • Incomes rose 0.4% m/m (matching est.) after 0.2% gain
  • Price gauge tied to consumption rose 0.2% m/m (matching est.), rose 1.7% y/y (matching est.)
  • Excluding food and energy, prices rose 0.2% m/m (est. 0.1% rise), rose 1.5% y/y (matching est.)

Key Takeaways

The pickup in nominal consumer purchases shows Americans appear more eager to spend in the second quarter following the weakest gains since 2009 in the January-March period. Household balance sheets that have been strengthening with a tightening labor market and rising wages should help buoy spending as the broader economy gains momentum. Wages and salaries rose 0.7 percent from the previous month, matching the fastest gain since April 2016.

While Federal Reserve policy makers should take some comfort that the results were in line with forecasts and core prices exceeded estimates, their preferred inflation gauge did slow down on a year-over-year basis, slipping slightly further away from the 2 percent annual target. The central bank is expected to raise interest rates at its June meeting, though a sustained slowdown in inflation could delay another hike this year.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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