By Geoffrey Smith
Financial Eye — U.S. consumers kept spending in April, amid fresh signs that, at least in annual terms, may have peaked for the current cycle.
The figures are a reminder of the broad momentum in the U.S. economy, despite a clutch of headline-grabbing reports from the retail sector over the last couple of weeks that have shown signs of consumer demand – the traditional engine of U.S. growth – weakening.
“This isn’t the onset of a recession,” said EY chief economist Greg Daco via Twitter.
rose by a stronger-than-expected 0.9% in the month. That was a slowdown from March, but March’s data were also revised higher to show a gain of 1.4%, rather than the initially reported 1.1%. Spending outstripped expectations even though personal income growth slowed for the second month in a row. rose only 0.4%, less than the 0.5% posted in March. Analysts had expected it to keep growing at the same pace.
At the same time, the annual rate of inflation, as measured by , eased slightly to 6.3% from a 40-year high of 6.6% in March, while the fell to 4.9% from 5.2%. In monthly terms, s rose 0.3%, in line with expectations.
“The consumer spending boom continues,” said Jason Furman, a senior fellow with the Peterson Institute in Washington D.C. He noted that adjusted for inflation, consumer spending rose 0.7% in April.
“Even if it is flat in May June, (it) will be (a) 4.1% annual rate for Q2,” Furman argued, pointing to the ongoing process of consumers running down their pandemic-era savings. In the last eight months, the U.S. personal savings rate has fallen from 8.1% of income to only 4.4%, its lowest since the 2008 financial crisis.
Inflation and growing cost-sensitivity by consumers have nonetheless weighed heavily on the stock market in recent weeks, with retailers from Walmart (NYSE:) to (NYSE:) and (NYSE:) all missing forecasts and lowering their outlooks for the year.
