Updated: 27-Jun-25 09:20 ET
| May Personal Income and Spending |
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| Updated: 27-Jun-25 09:20 ET |
Highlights
- Personal income declined 0.4% month-over-month in May (Briefing.com consensus +0.4%) following a downwardly revised 0.7% increase (from 0.8%) in April.
- Personal spending declined 0.1% (Briefing.com consensus +0.2%) following a 0.2% increase in April. Real personal spending declined 0.3%, which will be a drag on Q2 GDP forecasts.
- The PCE Price Index increased 0.1% month-over-month, as expected, but the core-PCE Price Index jumped 0.2% month-over-month, which was higher than expected (Briefing.com consensus 0.1%). Those moves left the PCE Price Index up 2.3% year-over-year, versus 2.2% in April, and the core-PCE Price Index up 2.7% year-over-year, versus 2.6% in April.
Key Factors
- The PCE Price Index for Goods was up 0.1% month-over-month and up 0.1% year-over-year versus down 0.4% in April. The PCE Price Index for Services was up 0.2% month-over-month, leaving it up 3.4% year-over-year, unchanged from April.
- Wages and salaries increased 0.4% month-over-month after increasing 0.4% in April.
- Rental income was down 0.4% month-over-month after being flat in April.
- Personal interest income rose 0.2% month-over-month after increasing 0.2% in April. Personal dividend income was down 0.3% month-over-month following a 1.1% decline in April.
- Real disposable income declined 0.7% month-over-month and was up 1.7% year-over-year versus 2.7% in April. Real personal spending declined 0.3% month-over-month and was up 2.2% year-over-year versus 2.9% in April.
- The personal savings rate, as a percentage of disposable personal income, decreased to 4.5% from 4.9% in April.
Big Picture
- The key takeaway from the report is that it has a stagflation aura about it, meaning it is a poor report for the growth outlook and a poor report for the inflation trend. That leaves the Fed between a rock and a hard policy place, yet given the Fed's attention to inflation concerns at this juncture, it seems like a report that will keep the Fed reluctant to cut rates at its July FOMC meeting.
| Category | MAY | APR | MAR | FEB | JAN |
| Personal Income | |||||
| Total Income | -0.4% | 0.7% | 0.6% | 0.7% | 0.5% |
| Wage and Salary | 0.4% | 0.4% | 0.5% | 0.5% | 0.2% |
| Disposable Income | -0.6% | 0.8% | 0.6% | 0.7% | 0.4% |
| Savings Rate | 4.5% | 4.9% | 4.4% | 4.4% | 4.2% |
| Personal Consumption | |||||
| Total (Nominal) | -0.1% | 0.2% | 0.7% | 0.3% | -0.2% |
| Total (Real, Chain $) | -0.3% | 0.1% | 0.7% | -0.1% | -0.6% |
| Core PCE Deflator | |||||
| Month/Month | 0.2% | 0.1% | 0.1% | 0.5% | 0.3% |
| Year/Year | 2.7% | 2.6% | 2.7% | 2.9% | 2.7% |