Consumer spending rises less than expected in May, PCE price index stable

Jun. 30, 2022 8:33 AM ETBy: Liz Kiesche, SA News Editor21 Comments

Close up of african american man with calculator checking bills

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May Personal Income and Outlays: +0.5% M/M vs. +0.5% expected and +0.5% prior (revised from +0.4%).

Personal spending: +0.2% M/M vs. +0.5% expected and +0.6% prior (revised from +0.9%).

PCE Price Index: +0.6% M/M vs. +0.7% expected and +0.2% prior.

+6.3% Y/Y vs. +6.5% expected and +6.3% prior.

Core PCE Price Index: +0.3% M/M vs. +0.4% expected and +0.3% prior.

+4.7% Y/Y vs. +4.8% expected and +4.9% prior.

Real disposable income fell 0.1% in May from April. Meanwhile, real personal consumption expenditures decreased 0.4%, with goods down 1.6% and services up 0.3%. This underscores the shift in consumer spending to services and away from goods.

Within services, increases were led by housing and utilities (mostly housing), "other services" (specifically international travel), and healthcare (led by hospitals).

Another good sign is that personal saving increased to $1.01T in May, up from $948.0B in April, and the personal saving rate was 5.4%, up from 5.2% in the previous month.

Note that Federal Reserve policymakers keep a close eye on the PCE number as a gauge of inflation. And while one month's data doesn't make a trend, the May numbers seem to indicate that Y/Y inflation hasn't worsened. Remember that the FOMC next meets in about a month.

On Tuesday, Consumer sentiment in June fell to its lowest level since February 2021

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