The American Consumer – Alive and Well in May!

Total personal income increased by 0.5% in May (in nominal terms) for the second month in a row. Looking at the individual components of personal income, wages and salaries were also up by 0.5%, while proprietor’s income increased by 0.7% and rental income rose by 0.8%. Income from receipts on assets (interest and dividend income) increased by 1.0%.  Personal consumption expenditures shot up by 0.9% after rising by just 0.1% in April.

Real disposable income (adjusted for taxes and inflation) increased by 0.2% and real personal consumption expenditures rose by 0.6%. Spending on durable goods (cars, appliances etc.) drove most of the increase, rising by 2.3%. Spending on nondurable goods (clothing, food, gasoline) posted a more moderate increase of 0.9%. Meanwhile, household outlays on services grew by just 0.2%.

As a result of spending running well ahead of income last month, the personal saving rate fell from 5.4% in April to 5.1% in May.

On a year-to-year basis:

• Real disposable income in May increased by 3.5%
• Real personal consumption expenditures were up by 3.4%
• Growth in real spending on goods (4.7%) continues to outpace spending on services (2.8%) although in dollar terms, Americans spend more than two times as much on services as they do goods.

Consumer prices were up over the month in May by 0.3% but over the year prices have edged higher by only 0.2%, well below the 3.5% annual increase in real disposable income.

After several months of sluggish spending, this was an encouraging report. The May consumer spending figures align more closely to improvements in the labor market and point to a stronger second quarter GDP report. Consumers on the whole are in better shape than has lately been assumed. A recent report released by the Federal Reserve showed that household balance sheets continue to improve. Household net worth increased by $1.6 trillion during the first quarter of this year to reach a record high of nearly $85 trillion. That equates to a year-over-year growth rate of 5.7%. The largest contributor to first quarter growth was the rise in the value of financial assets and capital gains. Gains in home equity also contributed but to a lesser degree. Of course, that means improvements in household finances are tilted to households that own a home, a stock portfolio or a retirement account. Stronger wage and salary gains would be a welcome development for everyone else. (Kimberly Ritter-Martinez)

Source:  http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm

California Tax Revenues Increase by 6.5% in 1Q15

The U.S. Census Bureau released figures for first quarter state and local tax collections by state and type of tax. At $213.8 billion, total state tax revenues collected across all fifty states (excluding Washington, DC) were up by 3.4% in the first quarter of 2015 compared with the same period in 2014 – a reflection of the improving health of the economy. In California, tax revenues were up by 6.5% in the first quarter, an increase of $2.2 billion.

Two of California’s largest tax revenue categories recorded an increase in collections during the first quarter. General sales tax revenues rose by 5.1% to $9.6 billion, coming in slightly below the national increase of 5.4%. Personal income tax revenues were $17.7 billion in the first quarter, an increase of 9.4% over the year. Nationally, personal income taxes were up by just 1.1%. Although personal income tax revenues constitute the largest share of taxes collected in the state of California, personal income tax revenues are extremely volatile, as demonstrated by the chart below, which greatly complicates the budget planning process.

In contrast, California’s corporations paid just $1.8 billion in income taxes during the first quarter, a decline of 2.5% compared with the same period a year ago. Corporate tax payments also tend to be very volatile but they count for a relatively small share of California’s “Big Three” revenue sources. Across the U.S., corporate income taxes were up by 9.9%.

Altogether, sales and personal income taxes made up 67.0% of state revenues nationwide. California relies more heavily on these two revenue sources compared to other states. Sales and personal income taxes regularly contribute over 75% of total tax revenues received in a given quarter.

Source:    http://www.census.gov/govs/www/qtax.html

California Home Sales and Median Prices in May

The California Association of Realtors released their report on California existing home sales and median prices in May. The statewide median price rose over the 12 months ending in May by 4.4% to $485,830. Compared with April, the median price was up by 0.8%. The May median price was also the highest recorded since November 2007.

Statewide, the number of single-family homes that closed escrow in May increased by 8.9% over the year to 423,360 units (seasonally adjusted, annualized rate) but was down by 1.1% from April. Home sales in May reached their highest level in nearly two years and was the second straight month in which sales rose above 400,000 units. Momentum in California’s housing market is looking pretty solid, although conditions vary significantly by metro area with several still posting a year-to-year sales declines. San Francisco was among that group with a drop of 13% in May.

With home prices continuing to rise and mortgage interest rates edging up ahead of the expected rate increase by the Federal Reserve, housing affordability is becoming more and more of a concern. The interest rate in May on a 30-year fixed-mortgage averaged 3.84%, up from 3.67% in April, but still below the year ago rate of 4.19%.

Below is a year-over-year summary of sales and price activity in Southern California by county. Although the statewide sales figures are seasonally adjusted, regional and county figures are not. In four of the six counties, sales rose at a faster rate than prices – something we have not seen for a while.

§  Los Angeles County:  unit sales increased by 2.2% over the year in May, while the median price rose by 5.1% to $432,570.

§  Orange County:  sales rose by 4.9% last month accompanied by an increase in the median price of 2.8% to $717,850.

§  Riverside County:  sales of existing homes rose by 7.8% and the median price increased by 2.7% to $332,490.

§  San Bernardino County:  sales increased by 12.7% in May with the median price rising by 3.0% to $220,890.

§  San Diego County:  unit sales were up by 6.5% and the median price rose by 8.2% to $538,660.

§  Ventura County:  sales jumped by 16.4% over the year while the median price moved up by 9.2% to $620,460.

Source: http://www.car.org/newsstand/newsreleases/2015releases/may2015sales?view=Standard

A More Diverse America

The U.S. Census Bureau regularly publishes reports that highlight the changing demographic landscape of America. Most recently, the Census Bureau revealed that millennials (persons born between 1982 and 2000) number 83.1 million and represent more than one quarter of the nation’s population. Because millennials constitute such a large share of the U.S. population (they outnumber the baby boomers by 7.7 million) and are now in or entering their prime working years, their attitudes and preferences regarding employment and consumption will have profound impact on the U.S economy.

Millennials are also much more diverse with 44.2% identifying as a minority race or ethnic group. In terms of diversity, however, the generation coming up behind the millennials is even more so. The youngest Americans (those 5 years old or less) have become the first majority-minority population group  in the U.S. with 50.2% being part of a minority race or ethnic group.

Contributing to the growing diversity of the United States, every race or ethnic group recorded more births than deaths between 2013 and 2014 except single-race non-Hispanic Whites. As of July 2014:

·         The nation’s Hispanic population totaled 55.4 million, up by 2.1% over the year

·         The Asian population numbered 20.3 million, increasing by 3.2%

·         Native Americans and Alaska Natives numbered 6.5 million, up by 1.4%

·         Native Hawaiians and Pacific Islanders totaled 1.5 million, increasing by 2.3%

·         The Non-Hispanic white population was 197.9 million, up by 0.5% over the year

Five states have already reached overall minority-majority status: Hawaii (77.0%); the District of Columbia (64.2%); California (61.5%); New Mexico (61.1%); and Texas (56.5%).

California was home to the largest population of Hispanics (15.0 million) of any state, while Los Angeles claimed the largest Hispanic population of any county (4.9 million). Additionally, California and Los Angeles had the largest Asian population of any state and county with 6.3 million and 1.7 million respectively. Further reflecting the wide diversity of our state and county, California and Los Angeles also had more Native Americans and Alaska Natives among their residents than any other county or state.

Source: http://www.census.gov/newsroom/press-releases/2015/cb15-113.html

May State and Local Employment Report

The Employment Development Department (EDD) released the state and local employment reports for the month of May. Total California nonfarm employment increased by 54,200 jobs over the month in seasonally adjusted (SA) terms.

The year-over-year change showed an increase of 465,700 jobs (SA). This equated to a growth rate of 3.0% and exceeded the May national increase of 2.2%. California’s private sector added 434,400 jobs (an increase of 3.3%) over the year, while employment in the public sector rose by 1.3% (31,300 jobs).

Ten of the 11 super-sectors added jobs over the year to May: construction; manufacturing; trade, transportation and utilities; information; financial activities; professional and business services; educational and health services; leisure and hospitality; other services; and government for a combined gain of 467,200 jobs. Professional and business services posted the largest gain on a numerical basis, adding 125,500 jobs (up 5.2%), while construction claimed the largest gain in percentage terms, increasing by 6.9% or 46,600 jobs.

The only sector to record a decline over the year was mining and logging, down 1,500 jobs, or 4.8%.

California’s unemployment rate edged up to 6.4% in May from 6.3% in April but was down from the year ago rate of 7.6%. At 6.4%, California’s unemployment rate is now just 0.9 percentage points above the national rate and below the long run average (since 2000) for the state of 7.6% Moreover, there is good news hidden in the increase since it was caused by the largest uptick in the state’s labor force in 25 years. Last month, 71,800 workers joined the labor force, an increase of 0.4%. Because so many more people were feeling optimistic about finding a job, the increase in the labor force outpaced the number of new jobs added.

County highlights:

(Note: With the exception of the Los Angeles unemployment rate, county level numbers are not seasonally adjusted, which means there can be large month-to-month fluctuations in job counts. A truer picture of how local labor markets are faring is revealed by focusing on the year-over-year numbers. Annual trends “correct” for the seasonal factors that influence certain industry sectors over the course of the year.)

§  In Los Angeles County, the seasonally adjusted unemployment rate was 7.6%, unchanged from April but below the year ago rate of 8.3%. Total nonfarm employment rose by 3,400 jobs over the month and by 100,500 jobs over the year, an increase of 2.4%.

Educational and health services posted the largest year-over-year gain in employment in May with an increase of 30,100 jobs, over two-thirds of which were in health care and social assistance.

Also recording significant job gains were trade, transportation and utilities (20,800 jobs); leisure and hospitality (15,900 jobs) and government (12,200), most of which occurred in local government.

Of note in the May report was a large decline of 11,900 jobs over the month in motion picture and sound recording (a subsector of the information super sector). Employment in this industry follows a seasonal pattern with a sharp drop in January followed by a rebound over the next two months to a peak in March, then leveling off or pulling back over the following months and surging to another peak late in the year. Over the year, employment in motion picture and sound recording was up by 1,800 jobs (1.6%). Currently, motion picture and sound recording jobs in Los Angeles County account for 30% of the nation’s jobs in this industry.

Two of the major industry sectors reported year-over-year declines in May: mining and logging (-200 jobs) and manufacturing (-2,100 jobs).

§  In May, the unemployment rate in Orange County was 4.2%, up slightly from 4.1% in April but below the year-ago figure of 5.2%. Nonfarm payroll jobs increased by by 13,000 over the month and were up by 50,700 over the year (an increase of 3.4%).

§  In the Riverside-San Bernardino area, the unemployment rate in May was 6.4% compared with 6.2% in April and the year ago rate of 7.8%. The region gained 3,400 nonfarm payroll jobs over the month and 51,800 over the year. This represented an increase of 4.0%.

§  In Ventura County, the unemployment rate was 5.2%, down from the year ago estimate of 6.1%. Total nonfarm employment increased by 1,200 jobs compared with April and by 4,200 (up 1.4%) over the year ending in May.

Although California’s unemployment edged up in May, it was for the right reason: an increase in the labor force, which expanded by the largest margin since February 1990. Once again, California’s labor marketed added jobs at a faster annual pace than the nation with job gains occurring across a  wide swath of the state’s industries. 

Sources:  http://www.labormarketinfo.edd.ca.gov/

Strong Rebound in May Retail Sales

Spending on U.S. retail and food services made a strong comeback in May, rising by 1.2%, while the flat reading in April was revised up to 0.2%. Core retail sales (ex-autos, building supply centers and gasoline stations) increased by 0.5%.

Eleven of the 13 major sales categories reported an increase in seasonally adjusted sales over the month. Posting stronger sales in May were motor vehicles (2.0%); furniture and home furnishings (0.8%); electronics and appliance stores (0.1%); building material and garden supply dealers (2.1%); food and beverage stores (0.2%); gasoline stations (3.7%); clothing and clothing accessories stores (1.5%); sporting goods, hobby, book and music stores (0.8%); general merchandise stores (0.8%); nonstore retailers (1.4%); and food and drinking places (0.1%).

The only category that recorded a decline in sales last month was health and personal care stores (-0.3%), while sales at miscellaneous store retailers were flat over the month.

On a year-over-year basis, total retail sales in May were up by 2.7%. Most major sectors reported a gain over the last 12 months except for gasoline stations (-18.6%); electronics and appliance stores (-1.7%) and general merchandise stores (-0.4%).

Overall, this was a good report. On a year-over-year basis, at 2.7% retail sales growth was weak. However, most of that weakness can be attributed to the 18.6% year-over plunge in gasoline sales that resulted from lower prices. The categories of  retail sales that go into the GDP calculation to measure consumer spending were stronger than expected, an indication that consumer demand is alive and well. (Kimberly Ritter-Martinez)

Source:  http://www.census.gov/retail/marts/www/marts_current.pdf

California Financial Report for May

The State Controller’s office has released the May financial report for the California General fund. Eleven months in the fiscal year (2014-2015), total receipts were up by 12.0% to $99.6 billion compared with the same period last year. Total disbursements ($107.6 billion) increased by 13.3% over the same period, exceeding cash receipts by $8.0 billion. As of May 31, the state’s cash balance stood at -$6.1 billion.

Total revenues (receipts from taxes, licenses, fees or investment earnings) were up by 12.4% to $97.5 billion compared with the first 11 months of the previous fiscal year. The state relies most heavily on personal income tax revenues, followed by sales and use taxes, and then to a much smaller extent, corporate income taxes. Year-to-date, nearly 70% of general revenue funds have come from personal income taxes.

• In May (fiscal year-to-date), personal income taxes increased by 14.8% to $65.4 billion and were in line with projections

• Corporate income taxes rose by 26.0% to $7.6 billion, falling just short of expectations (-0.3%)

• Revenues from sales and use taxes were up by 4.6% to $21.1 billion, running marginally ahead (by 0.1%) of forecasts

The schedule of cash disbursements in the Controller’s report showed that expenditures on Local K-12 Education were $40.2 billion during the first 11 months of the fiscal year, which was up by 16.2% compared with the previous year. Disbursements to Community Colleges increased by 20.4% to $4.4 billion. Funds received by the UC and CSU systems rose by 9.5% to $5.9 billion. Contributions to CalSTRS (the state teachers’ pension fund) increased by 9.3% to $1.5 billion.

Spending for the Department of Corrections increased by 9.9% to $8.9 billion, while outlays for Health and Human Services rose by 8.6% to $2.2 billion. The amount the state paid to service its debt obligation was up by 8.5% to $4.7 billion (debt service amounts are net of offsets such as federal subsidies and reimbursements for other services).

So far this fiscal year, General Fund receipts are running 0.1% ahead of Department of Finance projections. Unfortunately, disbursements were also slightly higher than expected with spending pushing past expectations by 0.7%.

As of May 31, the General Fund had $32.2 billion in borrowable resources against $6.1 billion in outstanding loans. The loan balance is comprised of $3.3 billion in internal borrowing and $2.8 billion of external borrowing in the form of revenue anticipation notes.

Sources:  http://www.sco.ca.gov/eo_pressrel.html

U.S. Light Vehicle Sales Bounce Back in May

Light vehicle sales in May were up by 6.3% over the year to 17.7 million units (seasonally adjusted annualized rate), the fastest sales pace in nearly 10 years. On a per unit volume level, 1.63 million light vehicles were sold, an increase of 1.7% compared with the same period last year. On a month-to-month basis, sales were up by 8.4%.

Total passenger car sales, including foreign and domestic models, edged up by just 0.3% over the year to 7.9 million units.

• Sales of domestic autos increased by 3.8% over the year to 5.8 million units
• Foreign auto sales plunged by 8.5% to 2.1 million units
• Compared with April, total passenger car sales rose by 10.2%, end a three month decline 

Light trucks, SUVs and crossover utility vehicles remain in high demand. Sales increased by 11.7% over the year to 9.8 million units and accounted for 55.4% of the light vehicle sales mix.

• Sales of domestic trucks increased by 8.9% over the year to 8.1 million units
• Foreign light truck sales, which comprise only about 20% of the light truck market, were up by 27.2% to 1.7 million units
• Compared with April, sales of light trucks increased by 8.3% 

Sales of medium-heavy trucks shot up by 12.5% over the year in April and by 2.1% over the month. Since these are vehicles used by firms to haul freight and make deliveries, an increase in sales of these larger trucks is an indication of stronger business activity.

American car buyers seem undeterred by the recent ups and downs in the economy. The strong sales rebound last month has some analysts considering an upgrade from current light-vehicle sales projections of 16.9 million units for 2015. 

Source:  www.bea.gov

Consumer Credit Surges by $20.6 Billion in April

Exceeding expectations for the third month in a row, total consumer credit outstanding increased by 7.3% ($20.6 billion) over the month in April to $3.38 trillion (seasonally adjusted annualized rate). March consumer credit was revised upward from a gain of $20.5 billion to $21.3 billion. Over the 12 months ending in April, total non-mortgage consumer debt was up by 6.6%.

Non-revolving debt, composed primarily of credit for new automobiles and student loans, increased by 5.8% in April or by $12 billion. Over the 12 months ending in April, non-revolving debt was up by 7.9%.

Revolving debt, consisting mainly of credit cards, jumped by 11.6% ($8.6 billion) and over the year to April was up by 3.3%. Since November of 2013, the year-over-year growth of revolving debt has run above its 12-month moving average as steady growth in consumer spending has led to increased demand for credit card borrowing. Even so, total credit card debt is still 12.0% below the peak level reached nearly seven years ago.

The huge run-up in non-revolving credit in recent years has raised concerns that borrowing for education and vehicles was becoming overextended, but recent data indicates this trend has moderated.

On the non-revolving side, the spread between interest rates offered on all accounts (average APR) and the APR offered on accounts that have been assessed interest, has increased. Since higher APRs are associated with higher risk borrowers, the increased spread indicates that either the level of debt accrued by higher risk consumers has increased or that credit card lenders have increased the rate on borrowers that are holding a balance. In any case, while higher levels of consumer debt are associated with an increase in consumer spending, continued growth does have risks.

The share of outstanding credit relative to disposable income as risen steadily over the past two years and now stands at 25.3% (the long run average ratio is 22.9%). However, if real disposable income is used, the ratio jumps to 27.5%. 

Source:  http://www.federalreserve.gov/releases/g19/current/default.htm

U.S. Job Growth Accelerates in May

The U.S. Labor Market Report covering the national employment situation in May showed a rebound in employment growth with a gain 280,000 jobs. The unemployment rate edged up to 5.5%, but that was a positive development resulting from 397,000 additional workers entering the labor force. Also encouraging, the average hourly wage increased by $0.08 in May to $24.96. Over the year, average hourly earnings were up by 2.3%.  

The employer payroll survey reported that total nonfarm employment in the United States increased by 280,000 jobs in May. Accompanying last month’s job gain were revisions to the March figure (revised up from 85,000 jobs to 119,000) and the April number which was revised down slightly from 223,000 to 221,000. With these revisions, the gains in March and April combined were 32,000 more than previously reported. Over the past three months, job gains have averaged 207,000 per month.

  

On a year-to-year (YTY) basis, U.S. employment expanded by nearly 3.1 million jobs, an increase of 2.2%. Every major industry sector added jobs over the year with the exception of mining and logging. The mining sector continues to scale back payrolls in response  lower energy prices and the resulting decline in energy sector investment. The fastest growing sectors in YTY percentage terms were construction (4.5% or 273,000 jobs); administrative and waste services (4.0%, 340,200 jobs); and professional and technical services (3.5%, 293,500 jobs). In numerical terms, health care services and leisure and hospitality added the most jobs with employment gains of 519,000 and 439,000 respectively.

New record high levels of employment were reached last month in the following super-sectors: trade, transportation and utilities, professional and business services; education and health care; leisure and hospitality and other services.

The unemployment rate ticked up to 5.5%, but for a good reason: more people entered the labor force last month hopeful of finding a job. The year ago unemployment rate was 6.3%; since 1990, the unemployment has averaged 6.1%. According to the Federal Reserve, the natural rate of unemployment currently stands at 5.38%. This figure is used to estimate the amount of slack in the labor market – reaching it would signal the economy has reached full employment.

Other labor market indicators in the May report continued to show improvement as well. The more comprehensive U-6 unemployment rate, which counts part-time workers who would prefer full-time work and persons who would like to work but have given up looking for a job, was unchanged over the month but at 10.8% was down from the year ago rate of 12.1%.

Individuals out of work are spending less and less time on the unemployment rolls. The median duration of unemployment in May fell to 11.6 weeks from 14.5 weeks a year ago. Improvements in the labor market have also helped bring down the share of workers who have been jobless for 27 weeks or more. In May, that share was 28.6% versus 34.3% in May 2014. Over the past 12 months, the number of long-term unemployed persons (not counting individuals who have given up looking for work) has fallen by 849,000. In addition, the shift toward full-time work has been steady. The share of full-time workers relative to part-time workers is fast approaching normal levels, reaching 81.6% in May. The long-run average is 82.0%.

Summary: The pace of job growth picked up in May with the largest monthly job gain so far this year. The unemployment rate rose last month, but for a good reason: more people were out looking for work. Hiring was wide spread among most industries and hourly earnings edged up. The strength of the labor market in May sends a strong signal that momentum in the economy is holding up. 

Source:  http://www.bls.gov/news.release/pdf/empsit.pdf

California Home Sales and Median Prices in April

The California Association of Realtors released their report on California existing home sales and median prices in April. The statewide median price rose over the 12 months ending in April by 7.4% to $481,760. Compared with March, the median price was up by 2.8%. The April median price was the highest recorded since November 2007.

Statewide, the number of single-family homes that closed escrow in April increased by 9.3% over the year to 427,620 units (seasonally adjusted, annualized rate) and rose by 9.2% compared with March. This was the third consecutive month to post a year-over-year increase in sales and was the first time home sales in California rose above the 400,000 mark since October 2013. It appears that at least some of the pent-up demand for housing is finally starting to turn into actual sales.

While the upswing in sales has been a long time coming, the lack of supply is still a concern. Across California, there was a 3.5-month supply of homes for sale in April versus 3.8 months in March and 3.6 months a year ago. In the Los Angeles metro area, the supply of homes for sale fell to 3.8 in April, down from 4.3 in March and in the Inland Empire, the supply was 4.4 months compared with 4.9. The low inventory of homes for sale in California relative to demand continues to push home prices higher.

Mortgage interest rates fell in April after increasing over the previous two months. The average 30-year fixed rate was 3.67%, down from 3.77% in March and down from 4.34% a year ago.

Below is a year-over-year summary of sales and price activity in Southern California by county. Although the statewide sales figures are seasonally adjusted, regional and county figures are not.

• Los Angeles County:  unit sales increased by 3.2% over the year in April, while the median price rose by 4.9% to $426,580.
• Orange County:  sales shot up by 19.9% last month but the median price rose by just 3.7% to $705,190.
• Riverside County:  sales of existing homes rose by 10.3% and the median price increased by 7.9% to $333,520.
• San Bernardino County:  sales increased by 10.6% in April with the median price rising by 9.9% to $219,150.
• San Diego County:  unit sales were up by 9.3% and the median price rose by 7.9% to $530,810.
• Ventura County:  Sales jumped by 19.7% over the year while the median price moved up by 4.0% to $598,500.

Source: http://www.car.org/newsstand/newsreleases/2015releases/april2015pending?view=Standard

Incomes Improve, but Spending Flat in April

After remaining flat in March, total personal income in the U.S. rose by 0.4% in April. Gains were posted across the board. Wages and salaries, and proprietors’ income both increased by 0.2%; rental incomes were up by 0.6%; and income from interest and dividends rose by 1.2%. Government transfers (social security, Medicare, Medicaid, unemployment insurance, veterans’ benefits) increased by 0.2%.

Real disposable income (adjusted for taxes and inflation) increased by 0.3% but real personal consumption expenditures were unchanged over the month after rising by 0.4% in March. Spending on durable goods fell by 0.8%, while spending on nondurables edged down by 0.1%. The only spending category to post an increase was services, up by 0.1%. The strong increase in income relative to spending resulted in an increase in the saving rate to 5.6% in April compared with 5.2% in March.

On a year-to-year basis, incomes were up in April compared with March, but overall spending was unchanged:

• Real disposable income in April increased by 3.5% versus 3.2% in March
• Real personal consumption expenditures were up by 2.7%,  the same as in March
• Growth in real spending on goods (2.8%) continues to outpace spending on services (2.6%) although in dollar terms, Americans spend more than two times as much on services as they do goods.

Consumer prices were unchanged over the month in April. A decline in goods prices (-0.2%) was offset by slightly higher prices for services (0.1%). Most of the decline in goods prices were due to lower prices for food (-0.2%) and energy (-1.4%). Excluding food and energy, consumer prices ticked up by 0.1% over the month. Over the year ending in April, consumer price inflation increased by just 0.1%.

The fact that consumers are choosing to spend less is helping to keep price inflation in check. Americans appear to be holding on to the extra bit of income they are earning. The flat reading for personal consumption expenditure does not bode well for consumer spending in the second quarter, which has gotten off to a weak start.

Source:  http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm