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Consumer Spending Flat in May, While Personal Incomes Drop Again

Inflation posted a sizable gain of 0.4%.
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Our teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. We provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands.
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Our teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. We provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands.

Image: Personal Income and Outlays, May 2021. Source: Bureau of Economic Analysis, US Department of Commerce

By Martin Crutsinger

WASHINGTON (AP) — Consumer spending was flat in May while incomes dropped for a second month as the impact of the government’s individual impact payments waned. Inflation, however, posted a sizable gain of 0.4%.

Consumer spending was unchanged in May, a marked slowdown following gains of 0.9% in April and a 5% surge in March that had been fueled by distribution of payments of up to $1,400 per individual from a $1.9 trillion stimulus bill, the Commerce Department reported Friday.

With those payments winding down, incomes fell by 2% in May after an even bigger drop of 13.1% in April.

Inflation tied to a gauge of consumer spending that is closely watched by the Federal Reserve increased 0.4% in May and is up 3.9% over the past 12 months, well above the Fed’s 2% target for annual price increases.

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Source: AP News

The Fed model compares the return profile of stocks and US government bonds.