COM - PCE April 2024: Personal Spending Data Confirm Severe Economic Slowdown

2024-05-31 11:11:58 ET

Summary

• Real PCE contracted by -0.05% in April 2024, below economists' forecast of -0.05% growth.
• The weak PCE data suggests a significant slowdown in the US economy, potentially raising macro risk for markets.
• A "nightmare" scenario would be that growth continues to slow precipitously while the Fed is not able to lower rates due to stubborn inflation.

The Bureau of Economic Analysis, or BEA, has just released its estimate for April 2024 US Personal Consumption Expenditures ("PCE"). Also known as “Personal Spending,” PCE directly accounts for over 60% of total US Gross Domestic Product ("GDP"), marking it a crucial indicator for assessing changing rates of expansion, contraction, and momentum in US economic activity.

According to the BEA, Real PCE (adjusted for inflation) contracted by -0.05% — a downside surprise compared to the median forecast of professional economists, which expected -0.05% growth....

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