Announced this morning, Personal Income increased 21.1% in March, higher than estimates, driven by the receipt of stimulus payments. Personal Spending increased 4.2% in March, about as expected and follows a -1.0% decline the previous month. The March PCE Deflator, increased 0.5% in the month and has increased 2.3% on an annual basis, as expected. The Core PCE Deflator, which excludes food and energy prices, increased 0.4% in March and grew 1.8% on an annual basis, also near estimates. Overall, a large increase in personal income, driven mostly by government stimulus payments with personal spending about as expected. These dynamics pushed the personal savings rate up to 27.6% for March, which could be fuel for additional spending in future months. As vaccinations continue and individuals get back to pre-pandemic behaviors, the strength of economic growth, inflationary pressures, and the pace of the recovery in the labor market will all need to be monitored closely by the Federal Reserve, to determine when their accommodative stance needs to change. In all, bond yields are little-changed, and equity futures are lower as we head into the market open.
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