U.S. consumer spending jumped more than expected in April, while year -over -year inflation was seen peaking. This is seen as something of concern as it could curb economic growth in the second quarter amid rising concerns over the recession.
Consumer spending, which accounts for more than two -thirds of U.S. economic activity, rose 0.9% last month based on a Commerce Department report on Friday. Data for March was revised higher showing a reading of 1.4% compared to 1.1% as previously reported.
Economists based on the survey even predicted consumer spending to rise 0.7%.This high data was supported by strong wage increases, with companies scrambling to fill a record 11.5 million job openings by the end of March.
At this point the Federal Reserve (The Fed) has taken a hawkish monetary policy stance to ease high inflation and return it to the 2% target however it has raised concerns over a recession, triggering equity sales and a surge in U.S. Treasury yields. and US dollars.
Concerns over the economic recession have also been exacerbated by Russia’s protracted war against Ukraine as well as China’s COVID-19 zero policy, which has ensnared the supply chain.
U.S. central bank has raised its policy interest rate by 75 basis points since March. The Fed is expected to raise the overnight rate by half a percentage point at each subsequent meeting in June and July.
Growth estimates for the second quarter are seen to exceed the annual rate of 2.0%. The economy contracted by 1.5% in the January-March quarter influenced by a record trade deficit and slower inventory accumulation.
While inflation continued to rise in April, it was not at the same rate as seen in nature in recent months. The personal consumption expenditure (PCE) price index rose 0.2% last month after rising 0.9% in March. In the 12 months to April, the PCE price index rose 6.3% after jumping 6.6% in March.
The rise of the annual PCE price index has slowed due to the large increase in the past year. Regardless of the volatile food and energy component, the PCE price index rose 0.3%, rising by the same margin for three consecutive months. The PCE core price index rose 4.9% year -on -year in April after rising 5.2% in March.
The US dollar index, which measures the US dollar against six major currencies, declined slightly by 0.13% to a trading level of 101.698 after PCE data was released.
