Friday, May 30, 2014

Personal Income Grew While Consumption Shrank in April

Personal income grew 0.3% in April, a slight slowing of the pace from the month prior. Personal consumption declined 0.1%, which caused the savings rate to increase to 4.0%. However a savings rate of 4.0% is still the second lowest level since 2008. Personal income increased 3.6% from year ago levels and consumption increased 4.3%.

Wage growth was the weakest this year, at 0.2%. Disposable income, which improved 0.3% in April, was also the weakest growth seen in 2014. Dividend growth was the driver behind income growth in April. Real personal consumption declined 0.3% and real personal income grew 0.1%.

Delayed spending due to the harsh winter was equalized in March, causing March to appear higher than usual. It could be a reason that April’s growth is low. April’s setback should be temporary as the economy gives way to stronger growth in the spring.

Inflation remained at low levels as the PCE deflator rose 0.2% in April, 1.6% above year-ago levels. While the annual rate is an improvement from last month, inflation remained below the 2.0% target of the Federal Reserve.

Read the BEA release.

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