by Calculated Risk on 6/28/2024 08:30:00 AM

The BEA released the Personal Income and Outlays report for May:

Personal income income increased $114.1 billion (0.5 percent at a monthly rate) in May, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $94.0 billion (0.5 percent) and personal consumption expenditures (PCE) increased $47.8 billion (0.2 percent).

The PCE price index decreased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent. Real DPI increased 0.5 percent in May and real PCE increased 0.3 percent; goods increased 0.6 percent and services increased 0.1 percent.
emphasis added

The May PCE price index increased 2.6 percent year-over-year (YoY), down from 2.7 percent YoY in April, and down from the recent peak of 7.0 percent in June 2022.

The PCE price index, excluding food and energy, increased 2.6 percent YoY, unchanged from 2.8 percent in April, and down from the recent peak of 5.4 percent in February 2022.

The following graph shows real Personal Consumption Expenditures (PCE) through May 2024 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was above expectations, and PCE was below expectations.

Inflation was below expectations.

Using the two-month method to estimate Q2 real PCE growth, real PCE was increasing at a 1.8% annual rate in Q2 2024. (Using the mid-month method, real PCE was increasing at 1.8%).  This suggests decent PCE growth in Q2.