U.S. consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month. The growth picture was further brightened by other data from the Commerce Department on Friday showing a surprise rebound last month in orders of manufactured non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.
They discuss the debate among Fed officials, centered on concerns over inflation not cooling fast enough and the labor market’s persistent strength.
Chris and Saied look at the increase in real GDP, which reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment.
They also offer some thoughts on a jump in consumer spending of 0.8% last month after gaining 0.1% in March. Economists had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, would rise 0.4%.
Join Chris and Saied for this fascinating and informative conversation.
Enjoy!
What You’ll Learn in this Show:
- The difference between Gross DOmestic Income (GDI) and Gross Domestic Product (GDP).
- Why the National Bureau of Economic Research has not declared a recession.
- Why the additional stress placed on all corporations and profitability will be very visible in July.
"Gross Domestic Income GDI Suggests US Is In Recession Right Now" (Zero Hedge)
"Strong US consumer spending, inflation readings put Fed in tough spot" (Reuters)
"Fed officials debated need for rate hike at last meeting, minutes show" (CNN)
"A Housing Bust Comes for Thousands of Small-Time Investors" (The Wall Street Journal)
