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Us Consumer Spending Increases But Incomes Stay Flat

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US consumer spending rose in April, official figures show, but the increase was less than expected.

The US Commerce Department figures showed spending up by 0.4% in April, the 10th month in a row it has risen.

But the rise was less than the downwardly-revised 0.5% increase seen in March. Analysts had expected the same figure for April.

The data suggests that much of the increased spending may have gone on higher food and energy costs.

Incomes flat

High food and energy prices were behind a rise of 0.3% in overall prices last month, according to the Personal Consumption Expenditures index.

The data suggests much of the increase in spending went on food and fuel. Spending adjusted for inflation was nearly flat, up by just 0.1%

All this good news in one day, Japan beats deflation and now American consumers are spending more. And people doubt this jobless recovery.

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Lookie what the cat dragged in this morning...

Personal income increased $46.1 billion, or 0.4 percent, and disposable personal income (DPI) increased $35.1 billion, or 0.3 percent, in April, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $41.5 billion, or 0.4 percent. In March, personal income increased $54.6 billion, or 0.4 percent, DPI increased $46.3 billion, or 0.4 percent, and PCE increased $54.8 billion, or 0.5 percent, based on revised estimates.

Real DPI decreased less than 0.1 percent in April, in contrast to an increase of less than 0.1 percent in March. Real PCE increased 0.1 percent in April, the same increase as in March.

So in real terms we have no increase in purchasing power at all. That's nice.

What do we find inside?

Real PCE -- PCE adjusted to remove price changes -- increased 0.1 percent in April, the same increase as in March.

Ok, so ~1.2% annualized. This is supposed to impress? It doesn't; that's roughly flat when one includes population change (~1% annually.)

So let's see if we can recap: The Fed has blown nearly all of their QE2 and for it they've gotten:

A stock market increase

No material improvement in PCE or disposable personal income (adjusted for inflation)

No material improvement in employment.

A durables series that reflects and is consistent with the above.

All that for $600 billion eh? Sounds like a gigantic FAIL to me, but of course opinions may differ..

Dennigers take.

Although he appears to have missed the bit about the govt spending $1.5tr it doesn't have also to gain this monumental gain in consumer spending.

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