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Registered Investment Adviser Caleb Lawrence

The major averages struggled in early trade to begin the week with small losses. Personal Income advanced .4% or 58.4 billion in April with strong gains seen in wages and rental income. Small business or proprietor’s income and investment income were both negative for the month. Considerable debate with respect to wage driven inflation a historical result of low unemployment rates. So far very little cost push has been seen from wages to date. Meaning that either the labor market isn’t as tight as the sub 5% unemployment rate suggests or that businesses don’t believe that they can pass along higher costs to their customers.

Personal Consumption Expenditures advanced just .2% in April, more or less following trend on strength in durable goods, motor vehicles, parts supplies and fuels. Quite a number of categories reported no change or declining spending for the month.

The price change measuring Personal Consumption Expenditure deflator or PCE advanced .2% in April as the year ago rate slipped again to just 1.7% after a very brief stint above the Fed’s desired 2% target in February. Gasoline and energy related products managed to show a notable increase for the month everything else either slipped or marked modest gains. Once again the media pushes the high spending and inflation theme to justify higher interest rates, yet the data doesn’t support it.

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