Consumer income and spending kept to their recent modest increases in May according to the Commerce Department and jobless claims were barely changed in the latest reporting week.
Personal income rose 0.5% more than double the 0.2% forecast and April's figure was revised up to 0.1% from flat. Consumer spending increased 0.3% in May as predicted while the prior month was revised down to -0.3% from -0.2%. Since the end of the recession in June 2009 income gains have averaged 0.3% a month as have spending increases.
Initial jobless claims fell 9,000 to 346,000 in the week ending June 22nd, a negligible 1,000 difference from 345,000 estimates. The four-week moving average fell 2,750 to 345,750.
Inflation remained quiescent in May with the core PCE deflator rising just 0.1% on the month and 1.1% over the year, both as forecast.
Companies added 175,000 new jobs last month and have averaged 155,000 over the past three months and 172,000 over the past year. Economists expects 165,000 new positions will be reported for June on next Friday when the Labor Department releases its Employment Situation Report. The unemployment rate is predicted to drop 0.1% to 7.5%.
The annual gain in American income improved to 3.3% in May from 2.9% in April and spending rose 2.9% over a year ago from 2.4% in April. Although both have recovered from the deep troughs in 2008 and 2009, the annual expansion of income and spending expansion remain well below their pre-crash rates.
In the decade from 1998 to 2007 US consumer income grew at an average of 5.5% a year and consumption climbed 5.8%.
Chief Market Strategist