by Calculated Risk on 6/01/2009 01:18:00 PM

The following graph shows real Personal Consumption Expenditures (PCE) through April (2000 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image in new window.

PCE declined sharply in Q3 and Q4 2008, and rebounded slightly in Q1 2009.

Q2 2009 is off to a weak start, with PCE in April below the levels of Q1. Although it is possible that PCE will pick up in May and June, it seems likely that PCE will be negative in Q2 (although not the cliff diving of the 2nd half of 2008).

Usually PCE and Residential Investment (RI) lead the economy out of recession, and right now both remain weak. As households increase their savings rate to repair their balance sheets, it seems unlikely that PCE will increase significantly any time soon.

Just a reminder - the end to cliff diving is not the same thing as "green shoots".