The reported May increase in US auto sales combined with a solid increase in retail sales suggest that consumer spending finally rebounded after a winter pause that extended into the early spring.
Societe Generale forecasts Q2 GDP to grow at 3.3% and expects real consumer expenditures to grow at 2.6%, moreover, this will be correct if the May projections for PCE come to fruition.
Societe Generale estimates that personal spending rose by 0.8% m/m in May, after a flat reading in April. This would mark the largest sequential gain in spending since March 2014. Admittedly, inflation will "eat up" about half of this increase given thier forecast for a 0.4% rise in the PCE deflator. The remaining 0.4% gain in real personal consumption would put the May level 2.2% above the Q1 average, significantly improving the momentum relative to the start of the quarter.
