U.S. personal spending likely to have risen 0.1 pct sequentially in May, says Wells Fargo

U.S. personal spending growth is expected to have decelerated in May, noted Wells Fargo in a research report. Personal spending had started the second quarter with a strong momentum, rising 0.4 percent in April after the March print was upwardly revised to a gain of 0.3 percent. After adjusting for inflation, consumer spending rose at an annual rate of 2.8 percent in the past three months, underpinning the call for the consumer spending component of GDP to rise 2.9 percent in the second quarter after a weak print of first quarter.

Personal income also rose in April by 0.4 percent, though inflation trimmed growth to just 0.2 percent. This was still a rebound from the initial two months of the year when inflation-adjusted income dropped. The PCE deflator, which is the U.S. Fed’s preferred measure of inflation was up 0.2 percent in April after falling in March that helped underpin the central bank’s case for a rate hike in June. Still, other readings of inflation in May have dismayed, with drops in both the CPI and import prices. According to Wells Fargo, personal spending is expected to have risen 0.1 percent in May.

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