Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  Personal income increased 0.4% in April

Implications:  Consumer spending keeps growing at a healthy clip, although inflation is now taking a larger bite.  Nominal consumer spending is up 4.8% versus a year ago, but up at an even faster 6.8% annual rate in the past three months.  The acceleration in spending corresponds to acceleration in private-sector wages and salaries, which are up 4.1% versus a year ago but at a 5.6% annual rate in the past three months.  The negative is that inflation has been accelerating as well.  Consumption prices are up a moderate 2.2% versus a year ago, but are up at a 3.6% annual rate in the past six months and a 4.6% annual rate in the past three months.  Although "core" consumption inflation (which excludes food and energy) is at a lower level, it is also accelerating, up 1% versus a year ago but up at a 1.9% annual rate in the past three months.  Given that commodity prices are off their recent highs, some of the headline inflation will temporarily abate over the next couple of months, but core inflation should continue to worsen.  This is an economic problem that calls out for a tighter monetary policy, not the continuation of an overly loose policy.  Longer term, "real" (inflation-adjusted) consumer spending should strengthen.  Consumer balance sheets are healthier and their financial obligations (monthly payments like mortgages, rent, car loans/leases, as well as other debt service), are the smallest share of disposable income since 1995.

Click here for the entire report.
Posted on Friday, May 27, 2011 @ 1:55 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.