May Personal Income Rises 0.2%; Spending Up 0.4%

WASHINGTON – May personal income posted a 0.2% increase, personal consumption expenditures rose 0.4%, and core PCE prices gained 0.2% for a 1.6% increase over the year.

Real PCE rose 0.3% after a revised 0.8% surge in April. This means Q2 real PCE is growing 4% on a seasonally adjusted annual rate and will support a surge in GDP. This result gives no signs that U.S. buying was being affected before Brexit.

Income was supported by an $11.8 billion advance in private wages, after a $38.7 billion jump in April. Proprietors' income, rents, income receipts, and transfers all gained.

Dividend income in particular posted a third outsized monthly gain: this income was up $7.2 billion in May, after a $5.9 billion gain in April and a $7.8 billion rise in March. It appears that more companies are paying out dividends and that individuals are adopting stocks that have payouts as a core investment.

Saving slipped to $730.6 billion, its smallest since December. The savings rate of 5.3% also was the lowest since December. Less saving supported spending as income growth slowed.

Overall, the monthly income and spending data show a continuation of growth in Q2 that suggests the U.S. consumer was in good shape before international events disturbed share prices. Even if there is a slight pullback in June spending the U.S. will be assured strong Q2 numbers.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.
MORE FROM BOND BUYER