The data comes amid a high level of uncertainty about where the economy heads from here. Excluding transportation, which increased 3.7%, new orders fell 0.2%.Ĭonsumers had to dip into savings to keep up their spending, with the personal savings rate of 4.1% representing a 0.4 percentage point drop from March. Economists surveyed by Dow Jones had been looking for a decline of 0.8%. There are only two key inflation-related data points before then, with the May nonfarm payrolls report due next Friday and the consumer price index out June 13.Īlong with the uptick in consumer spending, demand for durable goods also unexpectedly increased 1.1% in April, according to a separate Commerce Department report. Immediately following the report, market pricing swung to a 56% chance that the Fed will enact another quarter percentage point interest rate hike at the June meeting, according to the CME Group. The April spending numbers, however, show that consumers have continued spending in the face of both higher rates and strong inflation, meaning policymakers may have more to do. One way the Fed's rate hikes are supposed to work is by bringing down demand. The Fed targets annual inflation around 2%, meaning that the current levels remain well above the goal and leading to the likelihood that the aggressive moves the central bank has made over the last year or so could remain intact. The report comes just a few weeks ahead of the Fed's policy meeting June 13-14. "Prior to today's release, we believe that the Fed may have been hoping to take the summer off (i.e., pause and reassess), but now, it seems as if the Fed's job of getting inflation down is not over." "With today's hotter-than-expected PCE report, the Fed's summer vacation may need to be cut short as consumers' vacations fuel spending," noted George Mateyo, chief investment officer at Key Private Bank. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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