More weakening: Real (inflation-adjusted) Income and spending was negative in April. The PCE price index remained flat at 0.3 percent for the month and 2.7 percent for the year. 
Personal Income and Outlays, April 2024
The BEA’s Personal Income and Outlays report for April shows no further progress on the inflation front and weakening consumer spending.
PCE stands for Personal Consumption Expenditures. The PCE price index is the Fed’s preferred measure of inflation.
Key Income and Outlays Details
- Real Income was negative for two out of the last three months and barely positive in March.
- Real spending was negative in April as consumers threw in the towel.
- The PCE price index has been stubbornly high all year, up at least 0.3 percent every month.
- The year-over-year price index is higher than it was four months ago.
Personal Income and Real Personal Income
- Personal income increased $65.3 billion (0.3 percent at a monthly rate) in April
- Disposable personal income (DPI) —personal income less personal current taxes—increased $40.2 billion (0.2 percent)
- Real DPI decreased 0.1 percent in April and real PCE decreased 0.1 percent; goods decreased 0.4 percent and services increased 0.1 percent.
Real PCE and Real PCE Details
- Personal consumption expenditures (PCE) increased $39.1 billion (0.2 percent).
- The 0.1 percent decrease in real PCE in April reflected a decrease of 0.4 percent in spending on goods and an increase of 0.1 percent in spending on services.
- Within goods, the largest contributors to the decrease were gasoline and other energy goods (led by motor vehicle fuels, lubricants, and fluids), recreational goods and vehicles (led by information processing equipment), and other nondurable goods (led by recreational items).
- Within services, the largest contributor to the increase was health care (led by outpatient services).
I will have additional charts shortly. The lead chart tells the story at a glance.
More Soft Economic Data, Q1 GDP Revised Lower, Q4 GDI Significantly Lower
GDP and GDI data from BEA, chart by Mish
Yesterday I commented More Soft Economic Data, Q1 GDP Revised Lower, Q4 GDI Significantly Lower
The economic slowdown continues led by income and consumer spending.
The same story repeats in April.
The fundamental problem is explained here https://surplusenergyeconomics.wordpress.com/2024/05/31/280-not-what-youve-been-told/
Got oil?
The results in the BLS & PCE press releases should be carried out another decimal point. The difference in rate of change between .3% and .2% is 33 percent ! Of course that would lower the ability to manipulate the headline numbers and later revise under the radar. The monthly core PCE came in at .249% rounded down of course to .2%.
Inflation is ever and always a monetary phenomenon. As the fed debases the currency foreign dollar holders are cashing in their dollar chips. Dollars come sloshing home to feed hyper inflation ’til kingdom come.
The cure for inflation is collapse of the banking system. There is no other way short of a bonfire to make dollars disappear. I have high hopes for the commercial real estate in our criminally infested cities.
Crime is prime time news in LA. A catalytic converter theft crew shot an actor to death last weekend. Bus drivers and passengers are being attacked. One shot dead within a few hours after Mayor Bass announced stepped up security. Constant store burglaries. Criminals have started hiding surveillance cameras in bushes to observe intended victims homes.
MOMO media spun the PCE print very hard today… they’re talking multiple rate cuts again… laughable.
What’s laughable is that the Fed will absolutely find a way to justify one or two rate cuts this year and you’ll fail to profit from the giant equities rally that ensues.
Personally, I think the Fed should raise rates, but I know they won’t do the right thing and I’m positioned accordingly. Get bullish or go broke, buddy.
Not sure about near term rate cuts or their effect. There are a lot of trapped longs out there, me included in small caps, mortgage reits, bond funds hoping to break even and sell, and I think tptb are aware, not wanting to give that opportunity, but idk. But I won’t be bullish. “Fool me once, shame on me…”. And even though I might get bailed out of a few things, I’m totally opposed to rate suppression and dollar debasing because of the mess it has made of our economy and problems for the people.
The FED eased again in April. Money supply up sharply.
Are we at the inflection point already?
The reason there is no progress on inflation is they only have one thing they can control. They need help from OCC, Treasury and CFTC to reregulate commodity derivatives that have been the source of all inflation since 2000. The only way to get inflation down permanently is to ban trading on derivatives and let the market find its real supply and demand. Right now hedge funds and other institutions can front-run everything and make money with all the money they have and not take delivery of the end commodity. There is a tens of trillions derivative market that needs to be unwound in order to get inflation in control.
You don’t want farmers to be able to sell their crops in the futures market, because why again?
You have an interesting point. Perhaps taxing carried interest would help?
Uhh…deficit spending has no effect on inflation?
Interesting take on that. I’m not sure how the derivatives market can be tamed but I do think that it contributes to volatility. We need some market but the excess gambling on derivatives isn’t productive. I don’t think a ban would be productive. Maybe a way to lower the ability to utilize leverage?
And yet inflation was quite low until the crypt keeper went on his Brewsters Millions spending spree. You are the weakest link in internet troll form.
IF this were even remotely true, it needs to account for the time distribution of inflation. Ginormous derivatives markets have been around a long time, but we’ve only really had serious inflation in the past 3-4 years. Why now and not sooner?
Your headline is not correct. There was a meaningful though modest reduction in the month-over-month index from 0.338 to 0.2566 (~25% lower). It just gets lost in the rounding due to the small number effect & a 1 decimal place convention for speaking about the change in the index. Core PCE changed by a similar magnitude. It represents a potential return to disinflation after the Q4-Q1 hiatus.
This doesn’t fit the narrative Brian. Be prepared to get called names next.
“Within services, the largest contributor to the increase was health care (led by outpatient services).”
And this is my largest fear and the reason I stay away from health insurance companies despite being in favor of insurance stocks. The aging population will eat through all the tax and insurance premium money. I have had numerous co-workers go out for hip replacements, heart surgeries, and other operations, all of them in the 60+ category.
There is also a growing shortage of nurses and doctors for a variety of reasons so things in healthcare will continue to get ugly.
The medical stuff my mom get’s done is unreal. Wouldn’t surprise me to know that it’s running the 5-10 million range after a decade. Feels like it should be impossible at this scale… but it’s been going on for decades.
When you can wish money into existence, all things are possible, I guess.
After reading your utter bullshit yesterday, it indeed confirmed you are a child living with mommy
Good point. I’m in the over 60 group and most are having hip and knee replacements. I’m lucky as I still have the original parts in working order.
The thing is to stay ahead of the curve, if you think you will need a part replaced do it sooner than later because otherwise there will be a very long waiting period in a few years.
The average American knows the inflation numbers are significantly understated and know this by the prices they are paying for things they buy not some bs basket of goods government bureaucrats made up.
Oh God, not this again.
Reality is stubborn… sorry.
Suggest looking for your heart. No individual is “average”. Inflation for you isn’t the same as for me because you don’t need to pay for the same things I do.
Healthy young people with rising incomes and low-interest fixed-rate mortgages do not have the same bills and are not feeling inflation the same way as elderly renters with significant medical needs. That lowers the average, but doesn’t help the elderly one bit.
Many people are experiencing much higher inflation in their personal “basket of goods” than the government stats show, many are genuinely hurting financially, and now we’re seeing news headlines about how this is curtailing spending. This may even be the trigger for the next recession.