Inflation arrived hot for the second straight month inside the Federal Reserve’s metric that it utilizes to set policy while inflation adjusted spending. Given the pricing dynamics for the month of May it implies that we have not yet witnessed the peak in either topline or core inflation.
US households which saw no increase in income, resulted in a drawing down of savings to 2.6% from 3.2% in April which in turn produced a restrained increase of 0.1% in inflation adjusted spending.
What is worse is that real personal income excluding government transfers declined by 0.4% and disposable income fell by 0.5%. The latter declined for the third consecutive month. Thus, one can observe real stress building inside American households.
Both of which sets up for a decline in real spending in the May data which will damp household spending and GDP in the current quarter.
US households which saw no increase in income, resulted in a drawing down of savings to 2.6% from 3.2% in April which in turn produced a restrained increase of 0.1% in inflation adjusted spending.
What is worse is that real personal income excluding government transfers declined by 0.4% and disposable income fell by 0.5%. The latter declined for the third consecutive month. Thus, one can observe real stress building inside American households.
Both of which sets up for a decline in real spending in the May data which will damp household spending and GDP in the current quarter.
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