After falling -0.1% in January, personal income rose +0.2% in February and +0.1% in March, with inflation adjusted after tax disposable income flat in February and down -0.2% in March. Personal savings rose +0.1% to 7.3% in February as consumer spending only grew +0.1%, but savings slipped back to 6.5% for March, helping to provide the cash for a +0.9% spending gain. Durable goods spending was up +2.3% in March after a -1.1% fall in February, and nondurable goods were up +1.4% in March vs a -0.2% fall in February, while services spending increased both months at +0.4% and +0.5%. The yearly inflation rate dropped from +1.4% in January to +1.3% in February and +1.5% in March, while core inflation, which excludes food and energy costs, was dropped from +1.8% in January to +1.7% in February and +1.6% in March, slipping further past the Federal Reserve’s +2.0% target rate.

Citing declining inflation, the Federal Reserve unanimously voted to maintain the prime rate at 2-1/4% - 2-1/2%. The committee upgraded their assessment of economic activity from slowing to solid growth and that job gains were solid on average, but also noted that household spending and business fixed investment slowed in the first quarter. In the accompanying implementation notes, the interest rate paid on required and excess reserve balances was dropped by -0.05% to 2.35%.

There were 263,000 jobs created in April, dropping the unemployment rate from 3.8% to a 50-year low of 3.6%, with the more comprehensive U-6 measure that includes underemployed and discouraged workers holding steady for the third consecutive month at 7.3%. Jobs increased for professional/business services (+76,000, including 18,000 temporary workers), construction (+33,000), health care (+27,000) and social assistance (+26,000), while the employment rate for manufacturing was relatively unchanged for the third month at +4,000 jobs, and retail employment dropped by -12,000 jobs. The workforce participation rate dropped from 63.0% to 62.8% as the number of those not in the labor force rose by 646,000 to 96.2 million while the overall civilian noninstitutional population rose by 156,000 to 258.7 million.