This outpaced overall personal consumption expenditures (PCE), which increased 0.3 percent, or $40.8 billion, in April, according to estimates released Friday by the U.S. Bureau of Economic Analysis (BEA).
The bump in spending doesn’t quite match the April retail sales numbers from the Commerce Department. Those numbers showed a retail sales decline of 0.2 percent in April seasonally adjusted from March, although they rose an unadjusted 5.2 percent year-over-year.
“Slower tax refunds and weather may have been key factors impacting April’s numbers, but the fundamentals remain positive, particularly in long-term comparisons,” National Retail Federation (NRF) chief economist Jack Kleinhenz said when the data was released on May 15. “Despite there being a lot of volatility in the data from month to month, the long-term comparisons look good and the three-month average in particular is getting stronger.”
That outlook might have skewered on Friday after the announcement from the White House that the U.S. was imposing a 5 percent tariff on Mexican imports over the immigration issue that will rise to 25 percent by October.
David French, NRF senior vice president for government relations, said, “The growing tariff bill paid by U.S. businesses and consumers is adding up and will raise the cost of living for American families.”
French said the tariffs will force Americans to “pay more for produce, electronics, auto parts and clothes,” and impact consumer spending.
According to the BEA report, personal income increased 0.5 percent, or $92.8 billion, in April, while disposable personal income (DPI), a key barometer for retail sales, rose 0.4 percent, or $69.3 billion.
Real DPI, adjusted for inflation, was up 0.1 percent in April, and real PCE decreased less than 0.1 percent. The PCE price index increased 0.3 percent. Excluding the volatile food and energy sectors, the so-called core PCE price index rose 0.2 percent.
The increase in personal income in April primarily reflected increases in personal interest income, wages and salaries, and government social benefits to individuals, BEA said. The $3.7 billion decrease in real PCE in April was a result of a decline of $5.4 billion in spending for services that was partly offset by a $2.4 billion increase in spending for goods, BEA noted.
Within services, the largest contributor to the decrease was spending for household electricity and gas. Within goods, spending for gasoline and other energy goods was the leading contributor to the increase.
Personal outlays increased $42.7 billion in April, while personal saving totaled $990.3 billion. The personal saving rate–personal saving as a percentage of disposable personal income–was 6.2 percent.