Highlights
Personal income and outlays data indicate continued strength in the consumer sector, with income up a healthy 0.5% in April, following a 0.5% boost in March. The April gain was slightly below the consensus expectation of a 0.6% rise. Personal consumption for April rose 0.6%, following a 0.5% percent increase the prior month.

Indeed, the personal income report was very favorable for the consumer sector on the income side with wages and salaries rising 0.9% in April, following a 0.5% boost in March. However, personal consumption was led by nondurables which jumped 1.3% in April as higher gasoline prices boosted nominal spending in this category. In turn, the personal saving rate slipped to a minus 1.6% from minus 1.4% in March.

For prices, the overall PCE deflator rose a strong 0.5% with the core PCE up a more moderate 0.2%. Year-on-year rates showed a 2.9% gain for the overall reading, with the core up one tenth to 2.1%, at the high end of trend and at the upper limit that Federal Reserve officials point to.

Much of today's personal income report fit in with the known data from yesterday's GDP report. However, the changes on the monthly margin are a little clearer but not really different from expectations. Focus is on the key inflation measure PCEs excluding food and energy. We are still seeing some feed through of energy prices into non-energy components. But the impact is still moderate and there are still recent interest rate increases in the pipeline. Today's report does not tip the balance in either direction for whether the Fed will pause or continue further interest rate increases. Nonetheless, the consumer sector remains quite healthy and will remain an engine for continued economic growth this year.