by Calculated Risk on 6/29/2007 02:26:00 PM

If you read this AP article - Consumer Spending Up As Incomes Rebound - you might think that the Personal Income and outlays report showed strong real growth in May. You'd be wrong.

From the AP:

Consumers boosted their spending in May as their incomes grew solidly, an encouraging sign that high gasoline prices haven't killed people's appetite to buy. Inflation moderated.

It was the second month in a row that consumer spending went up 0.5 percent, the Commerce Department reported on Friday.

Incomes, the fuel for future spending, rebounded in May, growing 0.4 percent.

Incomes up "solidly". Spending up. Inflation moderated. What's not to like?

From the Census Bureau report on real Disposable Personal Income (DPI):

Real DPI -- DPI adjusted to remove price changes -- decreased 0.1 percent in May.

And spending?

Real PCE -- PCE adjusted to remove price changes -- increased 0.1 percent in May.

So real disposable income declined in May and real spending barely increased. Oh, and that great 0.1% increase in spending is really 0.06% rounded up. Annualize that!