Personal consumption expenditures (PCE) decelerated in April over March, showing some signs that rapidly rising inflation many be slowing across the U.S. economy.
Stocks rose on Friday to close out the week on a positive note after several weeks of heavy selling. The Dow Jones Industrial Average soared over 575 points and the S&P 500 Index climbed 2.5% higher, with both indexes marking their best weeks since November 2020. The Nasdaq Composite also rallied over 3%.
Investors were encouraged by new economic data on Friday that signalled inflation may be easing from a 40-year high. Analysts at Goldman Sachs
"The market usually falls in the run up to the peak in headline inflation, just as e have seen in recent months," Goldman analysts led by Sharon Bell said in a note on Friday. "But after the peaks, there is a little more variance and on average the market does recover."
For the week, the Dow rose over 6%, snapping its longest losing streak since 1923 at eight weeks. The S&P 500 was also 6.5% higher and the Nasdaq is up 6.8% on the week, with both indexes ending seven-week losing streaks.
Here's how the market settled to close out the week:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Consumer sentiment slipped lower in May:
Consumer sentiment declined further in May, as more Americans remained concerned about near-term inflation and business conditions. The University of Michigan's final monthly sentiment index fell to 58.4 in May, according to the institution's report published Friday, falling from the month's preliminary reading of 59.1.
That latest sentiment drop "was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers' future outlook for the economy, primarily due to concerns over inflation," Joanna Hsu, director of the Surveys of Consumers, wrote in a statement. "At the same time, consumers expressed less pessimism over future prospects for their personal finances than other future business conditions."
"Looking into the long term, a majority of consumers expected their financial situation to improve over the next five years; this hare is essentially unchanged during 2022," Hsu added. "A stable outlook for personal finances may currently support consumer spending. Still, persistently negative views of the economy may come to dominate personal factors in influencing consumer behavior in the future."
Personal spending rose in April, savings rate decelerated:
Consumers continued to spend last month even as inflationary pressures mounted. However, the personal saving rate fell to the lowest level in over a decade, raising some concerns that last month's trend may not last long.
Real personal spending rose 0.7% month-over-month in April, according to the Bureau of Economic Analysis' report published Friday, accelerating from March's 0.2% rise. Unadjusted for inflation, personal spending rose 0.9%, decelerating from March's 1.1% rise.
Personal income decelerated in April, rising 0.4% after March's 0.5% increase. Meanwhile, the personal savings rate fell to 4.4% from March's 5.0%, reaching its lowest level since 2008.
Inflation pressures on consumers somewhat ease in April:
