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Weekly Economic Report 5.31.24

The big number in the personal income and spending report was not the expected 0.3% hike in headline inflation – but rather the 0.3% increase in personal income. As in 2023, personal income soared this year in the first quarter (largely due to social security bumps), but last year income growth cooled starting in April to produce a 4.5% annual rate December over December. With the slowdown in nominal personal income growth this April, the first four months of 2024 produced the same increase as the first four months of 2023 – 2.2% (not annualized). Now, the big question for the Federal Reserve, inflation expectations and growth is whether the next eight months of 2024 experience the same moderation in nominal growth as in 2023 – which helped cool inflation far more than expected. Or will nominal income rise, threatening talk of tightenings due to either higher inflation or real growth that keeps labor markets tight?

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