US personal spending undershoots forecasts slightly, inflation falls short

Americans' spending on consumption was a tad lower than expected at the start of 2020 despite a jump in personal earnings.

According to the Department of Commerce, personal incomes and spending increased at a month-on-month pace of 0.6% and 0.2%, respectively.

Economists had anticipated increases of 0.3% for both.

Disposable incomes also leaped by 0.6% versus December, but most of that increase was funnelled was stashed away, with the personal savings rate rising from 7.5% at the end of 2019 to 7.9% last month.

Key readings on inflation contained in the same report meanwhile undershot forecasts by a wide margin.

The headline price deflator for personal consumption expenditures increased by 0.2% on the month, pushing the year-on-year rate of gains up from 1.5% to 1.7% (consensus: 1.9%).

Similarly, at the core level, the PCE price deflator was up by 0.1% on the month and 1.6% on the year (consensus: 1.7%), up from 1.5% in January.

To take note of, the core PCE price deflator is the Federal Reserve's, the US central bank's, preferred inflation gauge, for which it has a symmetric target of 2.0%.