Highlights

  • There’s been an upward revision of the first quarter’s real GDP to a 1.4% annualized increase from the previous estimate of 1.3%.
  • Consumer spending growth saw a slight acceleration to 0.2% in May, though weaker than expected.
  • May experienced a slump in new home sales, which were weaker than anticipated, with an 11.3% decrease in month-over-month comparison and a 16.5% decrease in year-over-year comparison.

Increased GDP and Personal Consumption

First quarter GDP growth was revised up in the third and final estimate to 1.4%, but consumer spending revised down to a larger 2.3% decline.

  • Notably, gross private investment was revised to a growth of 4.4% from 3.2%.
  • Personal consumption was revised down to an increment of 1.5% from 2.0%.
  • Spending on goods was revised down to a 2.3% decrease.
  • Spending on services was revised down to a gain of 3.3% from 3.9%.

Consumer Spending Growth

Consumer spending growth accelerated in May but came in weaker than expected even though income growth accelerated.

  • Consumer spending growth accelerated to 0.2% in May.
  • Personal income growth quickened to 0.5% from 0.3% in April.
  • Employee compensation growth also accelerated to 0.6% from 0.2% in April.
  • Proprietors’ income remained steady for two consecutive months.

Housing Market Trends

New and pending home sales declined in May. All measures of home sales declined in May.

  • May observed a significant drop in new home sales, with an 11.3% decrease month over month and a 16.5% decrease year over year.
  • The entire country saw a decline in new home sales.
  • New home inventory climbed by 1.5% month over month and 12.9% year over year.
  • Pending home sales also reduced by 2.1% in May, a 6.6% decrease year over year.

Consumer Confidence

Consumer confidence declined in June, and measures of consumer sentiment also showed modest declines for the month.

  • Although consumer confidence dipped 0.9% in June, the consumer sentiment index from the University of Michigan declined 1.3% in June compared to May but was up 6.2% year over year.
  • The median consumer expectation for inflation in a year dropped to 3.0%.
  • Plans to purchase a vehicle in the next six months decreased compared to May.
  • The national average price for unleaded gas, according to AAA, dropped 1.2% from the end of May to $3.50 per gallon as of June 28.