The Commerce Department reported on Friday that consumer spending in the U.S. surged 5.6 percent m-o-m in June after a revised 8.5 percent m-o-m climb in May (originally an 8.2 percent m-o-m jump). Economists had forecast the reading to show a 5.5 percent m-o-m gain.

Meanwhile, consumer income fell 1.1 percent m-o-m in May, following a revised 4.4 percent m-o-m decline in the previous month (originally a 4.2 percent m-o-m decrease). Economists had forecast a 0.5 percent m-o-m drop.

The June decline in personal income was more than accounted for by a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in May. Partially offsetting the decline in other government social benefits were increases in compensation of employees and proprietors’ income as portions of the economy continued to reopen in June. Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, also rose in June.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.2 percent m-o-m in June, following a revised 0.2 percent m-o-m advance in the prior month (originally a 0.1 percent m-o-m uptick). Economists had projected the index would increase 0.2 m-o-m.

In the 12 months through June, the core PCE increased 0.9 percent after a 1.0 percent surge in the 12 months through May. Economists had forecast an advance of 1.0 percent y-o-y.