The Rising Influence of Rising Affluence

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Fed May meeting minutes were released this morning. The BLS report the Fed is referencing in the quote below shows that personal income increased .5% in March and personal consumption expenditures, PCE, increased 1.1%. GDP may have dropped but the American consumer continues to do their part so other parts of the economy are slowing quickly enough to cause GDP to shrink.

The information available at the time of the May 3–4 meeting suggested that U.S. real gross domestic product, (GDP), declined in the first quarter. However, first-quarter growth in private domestic final demand was faster than in the previous quarter, while labor market conditions tightened further in March. Consumer price inflation through March—as measured by the 12-month percentage change in the price index for personal consumption expenditures (PCE)—remained elevated.

Minutes FOMC May 3-4 2022