The Commerce Department reported on Friday that consumer spending in the U.S. rose 0.5 percent m-o-m in April after a revised 4.7 percent m-o-m jump in March (originally a 4.2 percent m-o-m increase). Economists had forecast the reading to show a 0.5 percent m-o-m gain.

Meanwhile, consumer income tumbled 13.1 percent m-o-m in April, following a revised 20.9 percent m-o-m climb in the previous month (originally a 21.1 percent m-o-m surge). Economists had forecast a 14.1 percent m-o-m decline.

The April drop in personal income primarily reflected a decrease in government social benefits. Within government social benefits, "other" social benefits fell as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in March. Unemployment insurance also declined, led by decreases in payments from the Pandemic Unemployment Compensation program.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.7 percent m-o-m in April, following an unrevised 0.4 percent m-o-m advance in March. Economists had projected the index would increase 0.6 percent m-o-m.

In the 12 months through April, the core PCE surged 3.1 percent, accelerating from a revised 1.9 percent in the 12 months through March (originally a 1.8 percent jump). Economists had forecast an advance of 2.9 percent y-o-y. This was the highest reading since the 1990s and exceeded the Fed’s 2-percent target.