Data released today showed a surge in consumer spending and a modest rise in income. Analysts at Wells Fargo, point out that the data diminishes the case for softening consumer spending.
Key Quotes:
“February’s spending number was hardly worth the wait, up just 0.1%, but March saw a 0.9% surge””the biggest one-month increase since 2009. That likely puts to bed any lingering worries about a spending retrenchment signaled by the curious drop in December spending.”
“Personal income has been less inspiring. The 0.1% March increase is obviously not on pace with the spending surge, but wages and salary gains of 0.4% are more encouraging.”
“The core PCE deflator showed slower inflation than expected coming in at just 1.6%. The weakness was likely exaggerated in March and we look for some pick-up in this measure over the next few months, but we expect it to remain below 2% this year.”
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