In April, U.S. household personal income soared by 0.8%. This sharp rise was well above analysts’ forecasts for the fourth consecutive month. Analysts had projected a personal income growth of just 0.3%, making this third month of growth another strong signal of the overall economy’s resilience. This new 0.9% jump builds on a 0.7% household income increase in March and one just as big—0.8%—in February.
Consumer spending showed solid growth. The spike in incomes wasn’t even the biggest story, as consumer spending actually outperformed expectations with a 0.2% increase last month. This increase in household income and spending despite unprecedented Federal Reserve interest-rate increases indicates that most Americans are benefiting from increased financial stability while not fueling inflationary pressure. Even better, the core personal consumption expenditures price index, a key measure of inflation, dropped to 2.5% y/y. That’s a four-year low and a welcome indication that inflation is being brought under control.
This long-term increase in median household income is matched by an increase in the share of this income that households are saving. This figure ticked up to 4.9%, which is right in line with the 25-year average of 5.6%. The jump in savings might be a sign of consumers playing it safe with an uncertain economy.
Even with the increase in income level and inflation stabilizing at low levels, the economic landscape is still challenging for many of today’s investors. Reports indicate that 77.37% of retail investor accounts lose money when trading Contracts for Difference (CFDs) and Spread Betting with certain financial providers. This staggering statistic puts the challenges that individual investors are facing today in context and underscores the struggles of trying to navigate the current market environment.