Ana içeriğe atla

Personal income surges 10.5% in April on the back of government relief payments but spending lags

This update corrects the monthly decline in core PCE in April.

The federal government mailed checks in April and May aimed at helping households keep paying their bills. Associated Press

The numbers: American’s personal income surged 10.5 % in April boosted by government coronavirus relief payments to households but consumer spending lagged, the Commerce Department said Friday.

Consumer spending fell 13.6% in April after a 6.9% drop in March. Economists polled by MarketWatch had expected a 13% decrease.

Meanwhile, personal income rose 10.5% in April, helped by government payments. Economists had expected a decrease of 2.1%.

What happened: The gain in income was driven solely by an 89.6% gain in government transfer payments in April. Wages and salaries fell 8% in April after a 3.5% decline in the prior month.

The rise in incomes and the drop in spending pushed the savings rate up to 33% in April from 12.7 in the prior month. The high rate of savings suggests consumers can spend more once they feel safe.

Inflation, as measured by an index for personal consumption expenditures, fell 0.5% last month. The core inflation index, which excludes food and energy, was down 0.4%. Over the past 12 months, the broad PCE index rose 0.5%, down from 1.3% in March, while the core gauge rose 1%, down from 1.7% in the prior month.

Big picture: The sharp rise in unemployment has led to consumers being cautious. Retail sales fell a record 16.4% in April.

The government checks over the past two months helped consumers pay their bills but for the economy to recover, consumer spending has to rebound.

On inflation, it looks like the spread of COVID19 has put downward pressure on consumer prices as demand has faded.

Some economists are starting to worry about deflation, or falling prices. Fed officials say they have the tools necessary to fight deflation, by keeping interest rates low as the economy recovers.

What are they saying? “While social distancing measures are gradually being relaxed across the country, we should not forget that lingering virus fear and restrained incomes will continue to constrain consumers’ willingness and ability to spend. We estimate household outlays will likely contract around 15% in Q2, or nearly 50% annualized, while real GDP shrinks by just under 40% annualized,” said Lydia Boussour, senior economist at Oxford Economics.

Market reaction: Stocks opened lower on rising tension between the U.S. and China. The Dow Jones Industrial Average DJIA, -0.06% was down almost 300 points in late afternoon trading.

Yorumlar

Yorum Gönder

Bu blogdaki popüler yayınlar

Digitalize Your Business and Save Money by Implementing CRM Software

Easily share resources and information with other team members, manage relationships with partners, vendors, and organizations, and create a community of loyal customers with just one software. A CRM software can prevent this by : Managing individual deals on the pipeline entourage reminders and alerts for deadlines Categorizing leads and opportunities based on value, length in the pipeline, and other relevant rubrics Tracking service ticket history Producing reports on production and using those to accurately forecast sales Storing virtual receipts from vendors, shoppers, and organizations, as well as track other forms of interaction Tracking inventory and production schedules Insurance Juggling different accounts is a bane for most insurance reps. With a CRM software, insurance companies can be smarter in managing customer information, converting these into insightful decisions and helpful solutions. Whether you ’re working solo or have a small team, a CRM can help you improve the wa...
2 yorum
Devamı

SF’s top money man grapples with dire forecasts as budget scenarios ‘keep getting worse’

It’s the rare San Franciscan who looks around our troubled city and thinks, “Gosh, our leaders sure do spend my tax money well.” Grime covers our sidewalks. Potholes dot many streets. Buses arrive late. Construction projects continuously get delayed. And, of course, our homeless crisis just gets worse. All that was true when San Francisco was rolling in cash, the economic envy of cities around the world with its $12.3 billion annual budget making it richer than many states. You know, back in early March, all those many eons ago. Now that the COVID-19 public health calamity and the resulting economic crisis have struck like twin disasters, the city budget outlook has grown dire — even more so than the city’s top money man had previously projected. And we can expect our already iffy city services to take a beating. Controller Ben Rosenfield acknowledged in a frank interview that his previously announced worst-case scenario of a $1.7 billion budget hole over the next 26 months isn’t the w...
Yorum Gönder
Devamı

Gambling on table tennis is blowing up -- but are the matches legit?

On a Monday in May, when bettors typically would be targeting the NBA playoffs or an MLB matinee, the wagering world is instead fixated on an internet stream of a table tennis match between two Russians in an undisclosed location in Eastern Europe. The camera angle is tight, almost as though it's shot from an iPhone perched in a corner of the bare-bones room that has blue tarps for walls. There are no announcers; the only sounds are the occasional reactions from the players or the scorekeeper, and the pitter-patter of paddles hitting the ball. There are hundreds of matches like this one being streamed daily, in tournaments called Setka Cup, Win Cup and Moscow Liga Pro. The action is fast-paced, and competitors range in age from early 20s to mid-60s. Some are athletic and highly skilled. Others are out of shape and overmatched. Money is pouring into U.S. sportsbooks on these matches -- hundreds of thousands of dollars in betting handle daily -- yet the matches are shrouded in such s...
Yorum Gönder
Devamı