US Personal income rose 0.5% month-over-month in May as rising prices hover just under the fastest rate in 40 years. Personal spending rose 0.2% month-over-month. Rising energy prices continue to be a key factor driving inflation and global oil prices remain elevated. The core PCE price index dropped year-over-year to 4.7% from 4.9% in April.
The PCE price index is closely watched since it is the preferred inflation measure of the Federal Reserve, which has begun raising interest rates for the first time since the pandemic began to tamp down rising prices.
The market seems to go through phases of trading on the premise that the US is at or close to, peak inflation. The shock will come if better inflation news in coming months is not coming.
Highlights
- Personal spending +2.1% vs +1.5% expected.
- Wages and salaries increased 0.5% month-over-month.
- Personal current transfer receipts were down 0.2% month-over-month.
- The personal savings rate as a percentage of disposable personal income ticked up to 5.4% from 5.2% in April.
- Real disposable personal income was down 3.3% year-over-year, marking the sixth straight decline.
- Real personal spending was up 2.1% year-over-year versus 1.9% in April.
PCE Index
- The PCE Price Index was up PCE price index +0.6% m/m vs +0.4% prior
- The PCE price index +6.1% y/y vs +5.8% prior
- The annual rate was the fastest since July 2008, reflecting increases in both goods and services.
Core-PCE Price Index
Personal savings rate as a percentage of disposable personal income
Source: US Bureau of Economics
From The TradersCommunity News Desk