PCE REPORT KEY POINTS:
- April U.S. consumer spending advances 0.9% versus 0.7% expected
- Core PCE, the Fed’s favorite inflation measure, climbs 0.3% month-on-month and 4.9% from a year earlier, in line with expectations
- Nasdaq[1] 100 futures extend pre-market gains as traders celebrate signs that household consumption remains healthy and that price pressures are beginning to cool
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The U.S. Bureau of Economic Analysis released its latest report on personal consumption expenditures this morning. According to the agency, April personal spending rose 0.9% month-over-month versus 0.7% expected - a sign that the American consumer remains resilient and still has gas in the tank to propel the expansion, aided in part by the robust labor market, some wage gains and enhanced savings accumulated during the pandemic.Strong consumer spending at the start of the second quarter may help allay fears of a recession, considering that household consumption is main driver of U.S. economic activity.
Elsewhere, the PCE Price Index, which measures costs that people living in the U.S. pay for a variety of different items, edged up 0.2% month-over-month and 6.3% year-over-year. Meanwhile, the core PCE indicator, the Federal Reserve’s preferred inflation gauge that excludes food and energy and is used to make monetary policy decisions, advanced 0.3% on a seasonally adjusted basis, bringing the annual reading to 4.9% from 5.2% in March, in line with consensus expectations.
PCE REPORT DETAILS
Source: DailyFX Economic Calendar
The encouraging data boosted sentiment and confirmed the belief that inflationary pressures likely peaked during the first quarter and are slowly starting to ease amid tightening financial conditions and a favorable comparison base. While the directional PCE improvement is welcome, it is unlikely to prompt the Fed to deviate from its plans to
