Next week, personal income and spending data will be front-and-center as elevated gas prices continue to weigh on consumers. We expect personal spending rose by +0.4% m/m in April. The retail sales data for April largely quelled fears of demand destruction amid higher gasoline prices. Nominal non-durables spending rose significantly, and durables pared back slightly due to weaker auto sales. And while we expect spending to continue to increase in most services sectors, a notable uptick in inflation means we anticipate real personal spending will show a modest pullback (-0.1% m/m).
For inflation, we do not expect the PCE data to be as jarring as the April CPI and PPI prints. The upside to core CPI was largely mechanical – a methodological quirk attributed to how the BLS handled missing housing data during the October government shutdown. Housing matters relatively less for…
