Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Personal Income Declined 4.2% in May
Posted Under: Data Watch • PIC
Supporting Image for Blog Post

 

Implications:  Spending rose and government transfer payments (think the $1,200 "economic impact payments") fell, as the reopening of America kicked into gear in May.  As expected, incomes took a hit coming off the inflated April number that reflected government stimulus checks.  While unemployment benefits jumped in May, and private sector wages and salaries turned higher, they were simply no match for the decline in CARES act stimulus payments.  Outside of government transfer payments, personal income rose by 1.6% in May, led higher by wages in salaries, which should come as little surprise given the net 2.5 million jobs that returned in May.  Even with the increased spending and decline in incomes, the savings rate remained elevated in May at 23.2%.  This is down from the 32% rate we saw back in April, but still well above "normal" levels.  As we noted in this week's Monday Morning Outlook , these savings represent pent-up demand, yes, but also borrowing from the future. The next few months will continue to see the numbers muddled by the extraordinary measures taken in response to COVID-19, but what is clear is that the economy has turned the corner and the recovery process is under way.  On the spending side, personal consumption surged 8.2% in May, the largest monthly increase in the report's history (through coming off two straight months of record monthly declines).  The rise was led by spending on goods, which grew 14.1%.  Within the category, durable goods led the way, as consumers picked up purchases of autos and recreational goods and vehicles.  Spending on services rose 5.4% in May, as, once again, health care spending showed one of the largest movements, up 23.7%.  While spending rose across most major categories, a few highlights in May include spending on museums and libraries (+130.1%), air transportation (+111.0%), shoes and footwear (+53.6%), hotels (+48.9%), dental services (+43.2), furniture (+32.8%), and hairdressers (+20.0%).  On the inflation front, PCE prices rose 0.1% in May and are up 0.5% from a year ago.  Core prices, which exclude food and, more importantly, the very volatile energy component, also rose 0.1% in May, and core prices are up 1.0% from a year ago. We expect to see prices start moving gradually higher as the recovery progresses.  While the news is dominated by concerns over the increase in cases in states like Arizona, Texas, and Florida, the nation as a whole continues to see activity on the rise.  And the states experiencing their first wave of COVID are far better prepared – with better hospital planning and increased testing capacity – than the states that battled the virus back in March and April.  We do not expect to see a return to large-scale shutdowns, but continued economic progress, though the pace of growth may be lumpy geographically in the weeks and months ahead.   

Click here for PDF version

Posted on Friday, June 26, 2020 @ 10:36 AM • Post Link 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.
Search Posts
 PREVIOUS POSTS
Coronavirus High Frequency Data
New Orders for Durable Goods Increased 15.8% in May
Real GDP Growth in Q1 was Unrevised
Coronavirus High Frequency Data
New Single-Family Home Sales Increased 16.6% in May
Existing Home Sales Declined 9.7% in May
Saving and the Shutdown
M2 and C&I Loan Growth
Housing Starts Increased 4.3% in May
Coronavirus High Frequency Data
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
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.
Follow First Trust:  
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 © 2024 All rights reserved.