Summary
Consumer income is growing, but not as fast as inflation. Consumers had to dip into savings to pull it off, but not only did real personal expenditures rise in March, revisions lifted real February spending into positive territory as well. Rainy day savings won’t last forever, but for now at least the desire to resume service-sector activity is more powerful than inflation.
Experiences over Stuff Drives Spending Gains in March
In the wake of yesterday’s negative GDP print, the additional detail from today’s March personal income and spending report point to consumer spending growth that is outpacing the fastest inflation in decades. Revisions to prior months’ sales figures now confirm that despite initial reports that inflation outpaced spending in February, the opposite is true: real personal spending was positive in each of the first three months in the first quarter. Admittedly a downward revision to January keeps the level only slightly higher. Still, real PCE rose 0.2% in March, on top of upward revision to February that brought the monthly change to a +0.1% (-0.4% previously). READ FULL ARTICLE>>