WASHINGTON — The U.S. April personal income report was pretty much as expected, confirming a slow start to the second quarter.
April personal income posted up 0.2%, personal consumption expenditures rose 0.2%, and core PCE prices increased 0.1% for a 2.1% gain over the year. Real PCE was flat in a very slow start to the second quarter, suggesting consumption is slowing from a plus-1.0% seasonally adjusted annual rate in the first quarter.
The data confirm the possibility of a dip in second-quarter growth.
Private wages and salaries fell $18.2 billion as manufacturing and service wages fell; suspiciously, the last time employee compensation fell was April 2007 after the Commerce Department ceased accounting for annual bonuses.
In the first quarter wages had been boosted by large one-time bonuses of about $15 billion per month, suggesting there are difficulties at the department in making seasonal adjustments for this compensation. A government economist said the Commerce Department is “looking into” making better adjustments in future.
Rents, income receipts, and transfers were higher, but proprietors’ income was down $900 million, all in the nonfarm sector.
Tax stimulus payments will be treated as an offset to current taxes, the Commerce Department said. Taxes fell $3.4 billion in April even as income rose, suggesting the magnitude of the dip. The last time taxes fell was in January, probably reflecting investors writing off their market-based losses.
Within PCE, durables was down 0.3% but other spending advanced. The savings rate was up 0.7%.
— Market News International
