Personal spending increased +0.2% in April, matching street estimates. Spending on services increased +0.4% while spending on goods fell -0.1%. Adjusted for inflation, real personal spending increased +0.1%, which is below the 12 month average of +0.25%.

Spending grew 3.11% in 2024, but so far this year spending is only up 0.39%. And most of that has to do with buying autos before the tariffs kick in.

Broken down by category, April spending gains were led by housing & utilities, along with health care.

Personal incomes rose +0.8% in April, coming in well above the 0.3% estimates. Incomes have risen above the rate of inflation in 32 of the last 34 months.

Summary: The significant declines in sentiment is showing up in the spending data. Q1 PCE was the lowest in years, and Q2 has started off slow as well. But as long as the employment data along with personal incomes keep steady, it seems like the economy can hold up.

This week we’ll get some important data on the employment front, along with the business PMI’s, which will shed more light on how much damage has been done.

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