Consumer Spending Rebounds in March: I Propose it's Net Negative for 2nd Q GDP

Personal consumption expenditures jumped in March, but don't expect the rebound to continue.

The BEA's Personal Income and Outlays report shows real consumer spending jumped 0.4% in March following a downward revision in February and a smaller upward revision in January.

  • Personal income increased $47.8 billion (0.3 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.8 billion (0.3 percent)
  • Personal consumption expenditures (PCE) increased $61.7 billion (0.4 percent).
  • Real DPI increased 0.2 percent in March and Real PCE increased 0.4 percent.
  • The PCE price index increased less than 0.1 percent.
  • Excluding food and energy, the PCE price index increased 0.2 percent.

Projections

If consumer spending maintains the jump, second-quarter GDP will accelerate.

It appears that's what the models and forecasters expect.

I commented on that idea earlier today in Here We Go Again: GDPNow Projects 4.1% GDP.

Once again my typical mental wager on the GDPNOw initial forecast is as follows: "I'll take the under, way under".

Signs indicate the consumer is weakening. If so, it's a mistake to project the Mach rebound will continue.

And with revisions, don't expect the March jump to do much for first-quarter GDP either.

Mike "Mish" Shedlock

Comments
No. 1-2
channelstuffing
channelstuffing

gas,lol,what would the pce be if you removed the gov't paychecks,gov't welfare checks,gov't loans,gov't contracts,gov't retirement checks,gov't subsidized housing (subsiidized everything really)gov't entililment checks,gov't backed loan,gov't backed everything,what would the pce be then?

truthseeker
truthseeker

Mish I wonder what PCE would be if you removed gasoline prices?