Personal Income And Spending Mixed

Core inflation is moving in the right direction though slowly. The PCE price index excluding food and energy hit expectations at a 0.2 percent monthly gain in April with the year-on-year also hitting expectations at 1.6 percent. The overall PCE price index rose 0.3 percent with this yearly rate also rising 1 tenth, to 1.5 percent. For policy makers, especially Jerome Powell who forecast movement higher for the core, today's results will not build much rate-cut pressure on the Fed.

Other data in the report are mixed. Income rose a stronger-than-expected 0.5 percent in April though growth in the wages & salaries component was softer at 0.3 percent. Consumer spending proved a little less modest than expected, at 0.3 percent though the increase is centered in nondurable goods which reflects price effects for oil.

Ahead of what may be emerging tariff effects, inflation was subdued in April, running on the low side but tilting higher for the core and roughly still on target. That and respectable growth in income offset the slowing in spending and put today's report in the solid column of the current economic assessment.