Outsized falls in US personal income and spending in March

Personal income and spending in the US fell much more quickly than expected last month as the impact of the Covid-19 pandemic began to spread across the country.

According to the Department of Commerce, personal income and spending fell by 2.0% and 7.5% in March when compared to the month before.

Economists had penciled-in falls of 1.5% and 4.2%, respectively.

Prices however held up better than expected, with the year-on-year rate of increase in the price deflator for personal consumption expenditures slipping from 1.8% for March to 1.3% in April (consensus: 1.4%).

But at the core level, which excludes prices of food and energy from the calculation, the PCE deflator only dipped from 1.8% to 1.7% (consensus: 1.5%).