Consumer spending was unchanged in April, the US Bureau of Economic Analysis reports, but income delivered a better-than-expected rise. There’s also upbeat news for private-sector wages for April, which posted moderately stronger growth–growth that translates into a faster year-over-year gain. The firmer numbers on wages, the primary source of personal income, implies that the recent softness in consumption is self-imposed rather than the blowback from a slump in household earnings. The upward trend in the income ledger is still modest, but it provides another clue for arguing that the US economy isn’t in danger of sliding into a new recession.
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Gross domestic product (GDP) is down, but gross domestic income (GDI) is up. One hints at the possibility of a recession for the US while the other still points to growth, albeit at a lesser pace than we’ve seen recently. GDP retreated by 0.7% in the first quarter, but GDI—considered an alternate and arguably superior measure of economic activity—increased 1.4% (real seasonally adjusted annual rates).
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Positive performance was a rare commodity in May for the major asset classes. With the exception of US stocks and a fractional gain for US high-yield bonds, red ink dominated last month’s return ledger. The big loser: emerging market stocks in US dollar terms. After surging in April, posting the biggest monthly advance in more than three years, the MSCI Emerging Markets Index gave up a more than half of that gain and stumbled 4.0% last month.
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● US Economy Contracted 0.7% in First Quarter | NY Times
● Forget GDP: Here’s the new way Wall Street is measuring the US economy | BI
● Consumer Sentiment in U.S. Decreased in May to Six-Month Low | Bloomberg
● Eurozone Manufacturing Recovery Continues In May | RTT
● Germany May Manufacturing PMI 51.1 vs Flash Reading 51.4 | Bloomberg
● UK CIPS May Manufacturing PMI Lower Than Forecasts | MNI
● Greece faces crucial week of IMF repayments | BBC