US Spending Increases in May, While Income Fell

US personal spending jumped higher in May, but the income declined

Skerdian Meta•Friday, June 26, 2020•1 min read

The V-Shape recovery is underway for spending

The US personal spending and personal income reports have been released, which we covered live on our calendar section. Spending posted some major increase in March and April, during the lock-downs, but it has surged again in May, as the US reopened. But, the income has declined, which should be because of the Trump coronavirus cheques. Below are both reports:

US May Personal Spending

May personal spending +8.2% vs +9.2% expected
Prior was -13.6% (revised to -12.6%)
Personal income -4.2% vs -6.0% expected
Prior personal income +10.5% (revised to +10.8%)

With the revisions, the picture here remains a stronger-than-expected consumer and government stimulus cheques shore up incomes. The income for many people was bigger during the lock-downs because of these cheques, so now the income has declined in May.

Details:

Real personal spending +8.1% vs +8.7% expected
Prior real personal spending -13.2% (revised to -12.2%)
PCE deflator +0.1% vs 0.0% exp m/m
Deflator y/y +0.5% vs +0.5% exp
Core deflator y/y +1.0% vs +1.0% exp

The savings rate data has been extreme since the pandemic. Pre-pandemic it was around 8% then jumped to 12.6% in March, to 32.2% in April and 23.2% in May.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.