Real Disposable Personal Income & Personal Consumption Expenditures
Monthly Percent Change, Seasonally Adjusted
Personal income and consumer spending growth were weak in April, underscoring a big reason for the economy's recent soft patch. Real disposable personal income (income less taxes, adjusted for inflation) was flat for a second month in a row while real personal consumption expenditures grew just 0.1 percent. Sluggish wage growth plus rising energy and food prices have restrained real income growth this year, which has kept spending growth mired at a modest 0.1 percent in four of the past five months. Without stronger income growth, consumer spending, which accounts for 70 percent of GDP, is unlikely to accelerate enough to lead the economy onto higher ground. The plodding rate of spending growth is having a chilling effect on leasing demand for commercial real estate, particularly shopping centers. But there is some cause for guarded optimism. In a separate report last week, the Bureau of Economic Analysis said corporate profits reached an all-time high in the first quarter of this year, confirming that businesses have the cash to prolong the recent, improved pace of hiring. Stronger job creation, if it can be sustained, will boost wages, personal income and, eventually, retail sales as households get more money to spend.