Personal spending jumped 0.9% in April (beating expectations.... even BMO's above-consensus call), on the heels of the upwardly revised 1.4% gain in March. But yes, those are nominal figures. In real-terms, spending grew 0.7%, the most in four months, following an upwardly revised March of 0.5% (was 0.2%).
The core PCE deflator was steady... up 0.3% for the third month in a row. Although this slowed the y/y pace to 4.9% from three straight months of over 5% readings, we need to see the monthly increases cool more meaningfully before the Fed can breathe.
This is a solid start to Q2 and introduces some upside risk to the quarter. However, with inflation still near 40-year highs and demand still strong, the Fed will continue on its tightening path. - BMO Capital Markets
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