Consumer spending flat in April
Real personal consumption expenditure, or PCE, decreased by less than 0.1% to $11.2 trillion in April, according to the latest personal income and outlays report released on June 1 by the BEA (Bureau of Economic Analysis). Real consumer spending, which is adjusted for inflation, increased by 0.4% in the previous month.
Consumer spending on durable goods like motor vehicles and parts declined by 0.8% in April compared with spending in the previous month. Nondurable goods include items with an average useful life of less than three years such as food and clothing. Consumers spent 0.1% less on nondurable goods in April. Meanwhile, spending on services, such as utility bills, was up by 0.1%.
Gallup consumer spending measure flat in May
According to Gallup’s latest release on June 1, average daily consumer spending in May came in at $91, unchanged from the previous month. Gallup’s self-reported consumer spending poll for the US tracks daily discretionary expenditures based on respondents’ spending the previous day.
The spending this May contrasts sharply with May 2014, when consumer spending was at a six-year high of $98. Gallup attributes the weak consumer spending to a rise in oil prices in May and a dip in consumer confidence.
Implications for department stores
According to the BEA, consumer spending remained essentially unchanged despite a 0.3% rise in real disposable income stemming from a higher savings rate. The savings rate increased to 5.6% in April, up from 5.2% in March. The higher savings rate reflects consumer reluctance to purchase discretionary goods as well as a cautious outlook toward the economy.
Consumer spending accounts for over two-thirds of the US gross domestic product. We’ll look at this in greater detail in the next part of this series.