Personal income increased 0.5% in May, the same increase as in April, the Commerce Department reported Friday. Wages and salaries, the largest component of personal income, increased 0.2% percent in May after increasing 0.3% in April.
The increase in personal income primarily reflected increases in personal interest income, wages and salaries, and government social benefits to persons, Commerce said.
Meanwhile, the personal consumption expenditures price index rose 0.2% in May after rising 0.3% in April. The core personal consumption expenditures price index rose 0.2% in May after rising 0.2% in April. The core PCE, which excludes the food and energy components, is the Federal Reserve’s preferred measure of tracking underlying inflation. The core PCE was up 1.6% from a year earlier while the three-month annualized increase advanced to a five-month high of around 2%.
The Federal Open Market Committee will be looking at whether to cut interest rates at its next meeting on July 30-31.
The University of Michigan’s June consumer sentiment index declined to 98.2 from 100 in May. The current economic conditions index rose to 111.9 in June from 110.0 in May while index of consumer expectations fell to 89.3 from 93.5.
June's small overall decline was entirely due to households with incomes in the top third of the distribution, who more frequently mentioned the negative impact of tariffs, cited by 45%, up from 30% last month, the University of Michigan said.
“Most of the June slippage was concentrated in prospects for the national economy, with the unemployment rate expected to inch upward instead of drifting downward in the year ahead,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
"Interest rates were anticipated to rise by the fewest respondents in six years, and declines in mortgage rates have begun to have a positive impact on home buying," the university said.
“While Friday’s figures alone are unlikely to spur the Fed to act one way or another, a sustained flow of positive economic news in coming weeks could persuade policy makers to keep interest rates unchanged, despite pressure from financial markets and President Donald Trump,” Bloomberg News reported.
“While more negative trade news will act to decrease consumer spending, the persistent overall strength in consumer confidence is still consistent with growth of real personal consumption expenditures by 2.5% during the next 12 months,” the University of Michigan said.
