U.S. Personal Income Climbs 0.4% In April, Slightly Less Than Expected

The Commerce Department released a report on Friday showing personal income in the U.S. increased by slightly less than expected in the month of April.

The report showed personal income rose by 0.4 percent in April after climbing by 0.5 percent in March. Economists had been expecting another 0.5 percent increase.

Disposable personal income, or personal income less personal current taxes, edged up by 0.3 percent in April, although real disposable income, which excludes price changes, was unchanged.

The Commerce Department said increases in compensation and personal income receipts on assets were partly offset by a decrease in proprietors’ income.

Meanwhile, the report said personal spending advanced by 0.9 percent in April after surging by an upwardly revised 1.4 percent in March.

Personal spending was expected to increase by 0.7 percent compared to the 1.1 percent jump originally reported for the previous month.

Excluding price changes, real personal spending climbed by 0.7 percent in April after rising by 0.5 percent in March.

With spending increasing by much more than income, personal saving as a percentage of disposable income fell to 4.4 percent in April from 5.0 percent in March.

“Stronger consumption growth has only been possible because households have rapidly run down their savings this year,” said Michael Pearce, Senior US Economist at Capital Economics.

He added, “That is clearly unsustainable and raises the risks of a sharper downturn in consumption in the second half of the year.”

On the inflation front, a reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth slowed to 4.9 percent in April from 5.2 percent in March.

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