American households earned significantly more money in May than anyone on Wall Street predicted. Personal income climbed 0.7% month-over-month, nearly doubling the consensus expectation of roughly 0.3% to 0.4%.
The Bureau of Economic Analysis dropped the Personal Income and Outlays report on June 25, and the headline number wasn’t the only surprise. Personal consumption expenditures also jumped 0.7%, representing $156.1 billion in additional spending that beat the 0.6% forecast.
The numbers behind the surprise
April’s report came in flat, showing zero growth. Going from stagnation to nearly double what economists projected is the kind of whiplash that forces analysts to recalibrate their models.
Real disposable personal income, which strips out taxes and adjusts for inflation, rose 0.3% in May. After previous periods of stagnation, even a modest 0.3% gain in real terms suggests households are starting to outrun the inflation treadmill, if only slightly.
