US personal income likely grew strongly in March

US personal income is likely to have grown quite strongly in March, according to TD Economics. It is expected to have expanded 0.4% m/m as the strong labor market activity and rental income carry on supporting the consumers’ bottom line. However, the spending activity is likely to have remained weak in spite of an increase in personal disposable income, said TD Economics. Spending is likely to have grown just 0.1% m/m. Meanwhile, real personal consumption activity is likely to have stalled.

Personal consumption is expected to modestly contribute to the US GDP growth, which is likely to have grown just 0.9% q/q in Q1, added TD Economics. Meanwhile, the core PCE deflator is expected to rise weakly by 0.1% m/m, while annual core inflation is likely to decelerate to 1.5% y/y, noted TD Economics. Moreover, the annual core PCE inflation pace is expected to be below the target rate of 2% y/y due to unfavourable base effects in the coming months.