It’s the busiest morning for economic data in recent memory. Pre-market futures are coming up in tandem following this cavalcade of reports, but still in the red as of this hour: the Dow is -81 points, -0.16%, the S&P 500 -4 points, -0.06%, the Nasdaq -23, -0.08% and the small-cap Russell 2000 -2, -0.06%. Keep in mind this comes off all-time closing highs in the indexes on Wednesday.
Q1 GDP Dips 40 bps from 1st Look
The second entry of first quarter Gross Domestic Product (Q1 GDP) dipped from the originally reported +2.0% to +1.6% this time around — still an improvement over Q4’s weak +0.5% and the -0.6% reported in Q1 GDP a year ago, but well off the +4.4% rate we had seen back in Q3 of last year.
Consumption came down 20 basis points (bps) from the initial print to +1.4%, while Q1 core PCE quarter over quarter — excluding volatile food and energy costs — made a massive jump from +2.7% in the first read to +4.4% this time around. This is the highest monthly level on core PCE since Q1 of 2023 (but that was on a downward trajectory — the prior Q1 to that was peak near-term inflation, +6.1%). Today’s revision puts us back on an upswing.
PCE Indexes Mostly In-Line for April
Headline Personal Consumption Expenditures (PCE) last month came down 10 bps from expectations to +0.4% — matching February’s low — following +0.7% reported for March. Year-over-year PCE was in-line with estimates at +3.8%. This is up 30 bps from the prior month and the highest perch since May of 2023, but well off the Fed’s preferred inflation rate of +2%. The closest the Jerome Powell-led Fed got was +2.26% back in September of 2024.
Core prints for PCE were much the same compared to expectations: +0.2% month over month, down -10 bps from estimates, and in-line at +3.3% year over year, +10 bps higher than March. The last time we were this high on core PCE year over year was October of 2023 — again, back when we were riding the ski slope lower.
Personal Income for April was a disappointment: 0.0% versus projections for +0.4%, much lower than a downwardly revised +0.5% from the prior month, and the fourth non-growth Personal Income month of the past year — the worst performance we’ve seen post-Covid. Personal Spending came in exactly as expected for April, +0.5%, down from an upwardly revised +1.0% the previous month.
Perhaps most concerning here, from the perspective of inflationary pressures on American households based on this data, is the Savings Rate for April, which fell 60 bps month over month to +2.6%, less than half of the +5.5% reported a year-ago. This suggests consumers are now dipping into savings to pay for higher-priced items like gasoline, which have risen from roughly $3.15 per gallon a year ago to $4.50 today.
Durable Goods Orders Way Up: On Aerospace?
April Durable Goods Orders had been expected to nearly triple from +1.3% the previous month to +3.5% consensus. Instead, they shot up more than double that projection to +7.9% last month. This is easily the strongest print since the distorted post-“Liberation Day” tariff rollback in May of last year, which came in at +16.5%. Since then, we’ve only seen five months with positive Durable Goods growth, including this morning’s surprise jump.
However, roll back Transportation orders for durable goods and we’re back down to normal: +1.1%. This is still stronger than the +0.5% estimate, but below the +1.3% reported for the prior month. Further pulling apart these numbers, Non-Defense, Ex-Aircraft Durable Goods Orders — a proxy for enterprise spending like office furniture, computers, etc. — was negative last month: -1.1%.
We don’t see a breakdown among aircraft spending, but perhaps the “space race” currently ongoing — ahead of SpaceX’s hotly anticipated IPO — has already seen orders for space rockets and the like adding to the surprise upswing in spending here. It certainly would be worth further examination.
Jobless Claims Remain in Pocket: +215K, +1.786M
Last but not least, Thursday morning Weekly Jobless Claims also hit the tape this morning: +215K Initial Jobless Claims last week was slightly above the +213K consensus, and up somewhat from +210K reported for the prior week, which was revised up from +209K first reported. Continuing Claims rose to +1.786 million, slightly above estimates and above the downwardly revised +1.771 million from the previous week. This marks the fifth-straight week of sub-1.8 million longer-term jobless claims, which is consistent with a healthy labor force overall.
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PCE Comes in Line With Expectations
It’s the busiest morning for economic data in recent memory. Pre-market futures are coming up in tandem following this cavalcade of reports, but still in the red as of this hour: the Dow is -81 points, -0.16%, the S&P 500 -4 points, -0.06%, the Nasdaq -23, -0.08% and the small-cap Russell 2000 -2, -0.06%. Keep in mind this comes off all-time closing highs in the indexes on Wednesday.
Q1 GDP Dips 40 bps from 1st Look
The second entry of first quarter Gross Domestic Product (Q1 GDP) dipped from the originally reported +2.0% to +1.6% this time around — still an improvement over Q4’s weak +0.5% and the -0.6% reported in Q1 GDP a year ago, but well off the +4.4% rate we had seen back in Q3 of last year.
Consumption came down 20 basis points (bps) from the initial print to +1.4%, while Q1 core PCE quarter over quarter — excluding volatile food and energy costs — made a massive jump from +2.7% in the first read to +4.4% this time around. This is the highest monthly level on core PCE since Q1 of 2023 (but that was on a downward trajectory — the prior Q1 to that was peak near-term inflation, +6.1%). Today’s revision puts us back on an upswing.
PCE Indexes Mostly In-Line for April
Headline Personal Consumption Expenditures (PCE) last month came down 10 bps from expectations to +0.4% — matching February’s low — following +0.7% reported for March. Year-over-year PCE was in-line with estimates at +3.8%. This is up 30 bps from the prior month and the highest perch since May of 2023, but well off the Fed’s preferred inflation rate of +2%. The closest the Jerome Powell-led Fed got was +2.26% back in September of 2024.
Core prints for PCE were much the same compared to expectations: +0.2% month over month, down -10 bps from estimates, and in-line at +3.3% year over year, +10 bps higher than March. The last time we were this high on core PCE year over year was October of 2023 — again, back when we were riding the ski slope lower.
Personal Income for April was a disappointment: 0.0% versus projections for +0.4%, much lower than a downwardly revised +0.5% from the prior month, and the fourth non-growth Personal Income month of the past year — the worst performance we’ve seen post-Covid. Personal Spending came in exactly as expected for April, +0.5%, down from an upwardly revised +1.0% the previous month.
Perhaps most concerning here, from the perspective of inflationary pressures on American households based on this data, is the Savings Rate for April, which fell 60 bps month over month to +2.6%, less than half of the +5.5% reported a year-ago. This suggests consumers are now dipping into savings to pay for higher-priced items like gasoline, which have risen from roughly $3.15 per gallon a year ago to $4.50 today.
Durable Goods Orders Way Up: On Aerospace?
April Durable Goods Orders had been expected to nearly triple from +1.3% the previous month to +3.5% consensus. Instead, they shot up more than double that projection to +7.9% last month. This is easily the strongest print since the distorted post-“Liberation Day” tariff rollback in May of last year, which came in at +16.5%. Since then, we’ve only seen five months with positive Durable Goods growth, including this morning’s surprise jump.
However, roll back Transportation orders for durable goods and we’re back down to normal: +1.1%. This is still stronger than the +0.5% estimate, but below the +1.3% reported for the prior month. Further pulling apart these numbers, Non-Defense, Ex-Aircraft Durable Goods Orders — a proxy for enterprise spending like office furniture, computers, etc. — was negative last month: -1.1%.
We don’t see a breakdown among aircraft spending, but perhaps the “space race” currently ongoing — ahead of SpaceX’s hotly anticipated IPO — has already seen orders for space rockets and the like adding to the surprise upswing in spending here. It certainly would be worth further examination.
Jobless Claims Remain in Pocket: +215K, +1.786M
Last but not least, Thursday morning Weekly Jobless Claims also hit the tape this morning: +215K Initial Jobless Claims last week was slightly above the +213K consensus, and up somewhat from +210K reported for the prior week, which was revised up from +209K first reported. Continuing Claims rose to +1.786 million, slightly above estimates and above the downwardly revised +1.771 million from the previous week. This marks the fifth-straight week of sub-1.8 million longer-term jobless claims, which is consistent with a healthy labor force overall.