Personal Consumption Expenditure Jumps 1% in April

Personal income increased by $69.8 billion in April, growing at a seasonally adjusted annual rate of 0.4%, according to the most recent data release from the Bureau of Economic Analysis. Personal consumption expenditure increased by 1%, the biggest gain since August 2009, after showing no growth in March.

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Strong increase in consumption expenditure came coincided with a mild rise of disposable personal income – income remaining after deducting personal income taxes. In April, disposable personal income rose 0.2% over the revised March estimate. Adjusted for inflation, both disposable personal income and personal consumption expenditure continued their long-term steady growth trends. Compared to April 2015, real disposable personal income rose 3% and real personal consumption expenditure increased 2.5%.

As a result of spending outpacing income gains, personal savings rate fell to 5.4%. It was a small decline from a revised savings rate of 5.9% in March. The drop in savings rate, together with strong consumption growth, is likely to contribute to economic growth acceleration.

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