Consumer Spending Rebounds in March: I Propose it's Net Negative for 2nd Q GDP

Personal consumption expenditures jumped in March, but don't expect the rebound to continue.

The BEA's Personal Income and Outlays report shows real consumer spending jumped 0.4% in March following a downward revision in February and a smaller upward revision in January.

• Personal income increased $47.8 billion (0.3 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.8 billion (0.3 percent)
• Personal consumption expenditures (PCE) increased $61.7 billion (0.4 percent).
• Real DPI increased 0.2 percent in March and Real PCE increased 0.4 percent.
• The PCE price index increased less than 0.1 percent.
• Excluding food and energy, the PCE price index increased 0.2 percent.

Projections

If consumer spending maintains the jump, second-quarter GDP will accelerate.

It appears that's what the models and forecasters expect.

I commented on that idea earlier today in Here We Go Again: GDPNow Projects 4.1% GDP.

Once again my typical mental wager on the GDPNOw initial forecast is as follows: "I'll take the under, way under".

Signs indicate the consumer is weakening. If so, it's a mistake to project the Mach rebound will continue.

And with revisions, don't expect the March jump to do much for first-quarter GDP either.