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Business Standard
3 days ago
- Business
- Business Standard
US consumer spending rises slightly in April amid tariff uncertainty
US consumer spending increased marginally in April, with households opting to boost savings amid mounting economic uncertainty because of a constantly changing tariff landscape. The report from the Commerce Department on Friday suggested the economy struggled to rebound early in the second quarter after contracting in the January-March quarter for the first time in three years. Gross domestic product could, however, get a lift from a sharp contraction in the goods trade deficit last month as the front-running of imports to beat tariffs faded. Inflation was muted in April, with a measure of underlying price pressures posting its smallest annual increase in four years. A US trade court on Wednesday blocked most of President Donald Trump's import duties from going into effect in a sweeping ruling that the president overstepped his authority. They were temporarily reinstated by a federal appeals court on Thursday, adding another layer of uncertainty over the economy's outlook. "Consumers appeared to be saving for a rainy day last month as the Liberation Day tariff shock shook consumer confidence," said Scott Anderson, chief US economist at BMO Capital Markets. Consumer spending, which accounts for more than two-thirds of economic activity, rose 0.2 per cent last month after an unrevised 0.7 per cent jump in March, the Commerce Department's Bureau of Economic Analysis said. That was in line with economists' expectations. Spending was supported by outlays on services, mostly housing and utilities, healthcare as well as restaurants, hotels and motel stays. But goods spending softened amid cutbacks on purchases of motor vehicles and parts, clothing and footwear as well as recreational goods and vehicles. Pre-emptive buying of goods ahead of Trump's sweeping import tariffs helped to push spending higher in the prior month. Most of the tariffs have been implemented though higher duties on goods have been delayed until July. Duties on Chinese imports have been slashed to 30 per cent from 145 per cent until mid-August. Economists have argued that Trump's aggressive trade policy will sharply slow economic growth this year and boost inflation, concerns echoed by Federal Reserve officials. Minutes of the US central bank's May 6-7 meeting published on Wednesday noted "participants judged that downside risks to employment and economic activity and upside risks to inflation had risen, primarily reflecting the potential effects of tariff increases." The US central bank has kept its benchmark overnight interest rate in the 4.25 per cent-4.50 per cent range since December. The economy contracted at a 0.2 per cent annualized rate in the first quarter after growing at a 2.4 per cent pace in the October-December quarter, largely depressed by a flood of imports. With most of the tariffs in place, imports are collapsing, helping to compress the goods trade deficit by 46.0 per cent to $87.6 billion in April, a separate report from the Commerce Department's Census Bureau showed. Goods imports decreased $68.4 billion to $276.1 billion. Exports of goods increased $6.3 billion to $188.5 billion. US stocks opened lower. The dollar rose against a basket of currencies. US Treasury yields edged higher. But given the on-again and off-again nature of the tariffs, the front-running of imports is probably not over and neither is the gloom over the economy likely to lift soon, evident in the deterioration in consumer sentiment. That is prompting consumers to build savings. The saving rate jumped to a one-year high of 4.9 per cent from 4.3 per cent in March. Inflation was benign in April, with retailers likely still selling inventory accumulated before the tariffs. The Personal Consumption Expenditures (PCE) Price Index rose 0.1 per cent last month after being unchanged in March, the BEA said. In the 12 months through April, PCE prices increased 2.1 per cent after advancing 2.3 per cent in March. Stripping out the volatile food and energy components, the PCE price index gained 0.1 per cent last month following an upwardly revised 0.1 per cent gain in March. The so-called core PCE inflation was previously reported to have been unchanged in March. In the 12 months through April, core inflation rose 2.5 per cent. That was the smallest advance since March 2021 and followed a 2.7 per cent increase in March. The Fed tracks the PCE price measures for its 2 per cent inflation target. Economists expect inflation to accelerate this year as tariffs raise goods prices. Consumers' one-year inflation expectations have soared. The Fed minutes on Wednesday showed some policymakers assessed that the surge in short-term inflation expectations "could make firms more willing to raise prices." They also saw a risk that longer-term inflation expectations "could drift upward, which could put additional upward pressure on inflation."
Miami Herald
3 days ago
- Business
- Miami Herald
Annual PCE inflation for April was 2.1%, in line with expectations
May 30 (UPI) -- April personal consumption expenditure inflation was up just 0.1% for an annual rate of 2.1%, according to a Friday Bureau of Economic Analysis report. "From the same month one year ago, the PCE price index for April increased 2.1%," the BEA report said. "Excluding food and energy, the PCE price index increased 2.5% from one year ago." For the month, PCE inflation met the Dow Jones consensus forecast, but the annual rate was 0.1% lower than expected. "From the preceding month, the PCE price index for April increased 0.1%. Excluding food and energy, the PCE price index also increased 0.1%.," the BEA said. Spending on housing and utilities services was up 24.7% in April, heath care services spendingincresed by 20.3%. Gasoline spending was up 8.1%. Spending on food and beverages, vehicles, recreational goods, financial services, insurance, clothing, footwear and motor vehicle parts all declined. The BEA also reported personal income in the United States was up 0.8% in April. "Disposable personal income (DPI)-personal income less personal current taxes-increased $189.4 billion (0.8%) and personal consumption expenditures (PCE) increased $47.8 billion (0.2%)," the BEA said in a statement. The income increase reflected both compensation increases and higher government social benefits to individuals, according to the BEA. In April there was a $47.8 billion increase in current-dollar PCE - comprised of a $55.8 billion rise in spending on services partially offset by an $8 billion decrease in spending for goods. Personal savings amounted to $1.12 trillion in April while the personal saving rate was 4.9%. That rate is saving as a percentage of disposable personal income. Copyright 2025 UPI News Corporation. All Rights Reserved.
Miami Herald
3 days ago
- Business
- Miami Herald
Stock Market Today: A tweet on China, inflation cools, plus Nvidia and Tesla
The weekend is almost here! We're expected to have a lovely one in Colorado. I hope yours will be similarly wonderful. I wasn't planning to start the day with a tweet, but let's do it. This has prompted what was a fairly flat market to drop today. As I write this, S&P futures are down 33 points. The Nasdaq is lower by 130, and crude oil is now down 52 cents after being about 70 cents higher. Here's an overnight chart of the S&P 500. ThinkOrSwim It's hard to tell now if we're in for a wild ride today or whether traders are having a level of fatigue and will watch before making further reactions. In the meantime, we just got today's big economic news. The PCE Index, short for Personal Consumption Expenditures Index, is a measure of inflation. The Bureau of Economic Analysis reports that April's PCE increased by $47.8 billion, or 0.2%, which was 2.1% higher than a year earlier but lower than the 2.3% expectation. In other words, inflation is cooling. The PCE is the Federal Reserve's preferred benchmark for prices as it determines interest-rate policy. Premarket most actives include Nvidia (NVDA) , which had been down as much 1.4% but is now 0.4% lower. Jim Cramer attributes the dip to "meme money," which, to be honest, is driving so much of our markets these days. And hey, while we're at it, let's talk Tesla (TSLA) . Well, Elon Musk, actually. Today is expected to be the billionaire's last day in office as his official time with Doge comes to an end. Expect a news conference later this afternoon from the Oval Office with Musk and President Trump. However, the New York Times reports today that Musk used heavy amounts of drugs while on the campaign trail last fall with Trump. In fact, the paper reports, his use of ketamine was so great that he suffered from bladder problems, a known effect of chronic use. As Musk integrates himself back into Tesla leadership, shareholders will likely question him on this and it could become an Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
3 days ago
- Business
- Yahoo
The Fed's Preferred Inflation Gauge Was Milder Than Expected In April
Inflation in April fell to 2.1%, its lowest annual increase since September, and nearly to the Federal Reserve's goal of a 2% annual rate. April may be the low point for inflation for a while, as tariff costs begin to be passed on to consumers. April was a good month for household budgets overall, with income rising far faster than fell more than expected, dropping nearly to the Federal Reserve's target of a 2% annual rate by one prices rose 2.1% over the year in April as measured by Personal Consumption Expenditures, the Bureau of Economic Analysis said Friday. That was the lowest annual inflation since September. The inflation rate was lower than the expectations of forecasters, who had called for a 2.2% increase according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. Falling gas prices helped push down PCE Inflation, just as they did with the Consumer Price Index, a separate inflation measure released earlier this wasn't just gas prices that pushed inflation down, however. "Core" inflation, which excludes the volatile prices for food and energy, fell to a 2.5% monthly increase from 2.7%, the lowest since March 2021 and also lower than median forecasts. The Fed uses core PCE inflation to assess whether prices are increasing at its target rate of 2% a year. Unexpectedly cool inflation bolsters the case for the Fed to cut its benchmark interest rate, which it has held at higher-than-usual levels this year to stamp out the last remnants of the post-pandemic burst of inflation. However, Fed officials have been reluctant to cut interest rates until the effects of President Donald Trump's tariff campaign on the economy become clearer. Many economists predict tariff-related price increases and slowdowns will start affecting key economic measures such as inflation and unemployment in the coming months. "If there wasn't a trade war going on, we all might have been impressed by the resumption of inflation progress," Ali Jaffery, an economist at CIBC, wrote in a and White House officials have called on the central bank to lower interest rates, which would put downward pressure on interest rates for all kinds of loans. Fed officials have resisted that pressure for fear that Trump's high import taxes will stoke inflation. As of April, trade-related inflation hadn't materialized, even though several tariffs were already in outlook is muddy because tariff rates have changed frequently and drastically, through Trump's policy changes, and now with the court repealing and reinstating certain tariffs. Apart from the inflation data, the PCE report showed economic trends favorable to household budgets. Personal income rose 0.8%, the largest increase since January 2024, faster than the 0.1% monthly increase in consumer prices. Spending rose 0.2%, and the savings rate rose to 4.9%, the highest in a year, as households pocketed the extra said the jump in income was partly due to a surge in Social Security payments stemming from the Social Security Fairness Act, a law signed by former President Joe Biden in January just before he left office. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
UPI
3 days ago
- Business
- UPI
Annual PCE inflation for April was 2.1%, in line with expectations
April personal consumption expenditure inflation was up just 0.1% for an annual inflation rate of 2.1%, according to a Friday Bureau of Economic Analysis report. File Photo by John Angelillo/UPI | License Photo May 30 (UPI) -- April personal consumption expenditure inflation was up just 0.1% for an annual rate of 2.1%, according to a Friday Bureau of Economic Analysis report. "From the same month one year ago, the PCE price index for April increased 2.1%," the BEA report said. "Excluding food and energy, the PCE price index increased 2.5% from one year ago." For the month, PCE inflation met the Dow Jones consensus forecast, but the annual rate was 0.1% lower than expected. "From the preceding month, the PCE price index for April increased 0.1%. Excluding food and energy, the PCE price index also increased 0.1%.," the BEA said. Spending on housing and utilities services was up 24.7% in April, heath care services spendingincresed by 20.3%. Gasoline spending was up 8.1%. Spending on food and beverages, vehicles, recreational goods, financial services, insurance, clothing, footwear and motor vehicle parts all declined. The BEA also reported personal income in the United States was up 0.8% in April. "Disposable personal income (DPI)-personal income less personal current taxes-increased $189.4 billion (0.8%) and personal consumption expenditures (PCE) increased $47.8 billion (0.2%)," the BEA said in a statement. The income increase reflected both compensation increases and higher government social benefits to individuals, according to the BEA. In April there was a $47.8 billion increase in current-dollar PCE - comprised of a $55.8 billion rise in spending on services partially offset by an $8 billion decrease in spending for goods. Personal savings amounted to $1.12 trillion in April while the personal saving rate was 4.9%. That rate is saving as a percentage of disposable personal income.
