by Calculated Risk on 6/26/2014 08:57:00 AM

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

Personal income increased $58.8 billion, or 0.4 percent ... in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $18.3 billion, or 0.2 percent.
...
Real PCE -- PCE adjusted to remove price changes -- decreased 0.1 percent in May, compared with a decrease of 0.2 percent in April. ... The price index for PCE increased 0.2 percent in May, the same increase as in April. The PCE price index, excluding food and energy, increased 0.2 percent in May, the same increase as in April. ... The May price index for PCE increased 1.8 percent from May a year ago. The May PCE price index, excluding food and energy, increased 1.5 percent from May a year ago.

The following graph shows real Personal Consumption Expenditures (PCE) through May 2014 (2009 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.

Note: Usually the two-month and mid-month methods can be used to estimate PCE growth for the quarter (using the first two months and mid-month of the quarter). However this isn't very effective if there was an "event", and in Q1 PCE was especially weak in January and February - and then surged in March.

Still, using the two-month method to estimate Q2 PCE growth, PCE was increasing at a 2.3% annual rate in Q2 2014 (using the mid-month method, PCE was increasing less than 1.5%). Since the comparison to March will be difficult, it appears PCE growth will be below 2% in Q2 (another weak quarter).

On inflation: The PCE price index increased 1.8 percent year-over-year, and at a 2.8% annualized rate in May. The core PCE price index (excluding food and energy) increased 1.5 percent year-over-year in May, and at a 2.0% annualized rate in May.