Monday Moneybeat: Trade war worries

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: Consumer spending tailed off a bit in April. It did increase, just not as much. Following a big surge in March, American consumers increased their spending just three-tenths of a percent.

The Commerce Department also reported personal income jumped half a percentage point. Because income rose more than spending, that pushed up the personal saving rate.

April year on year price inflation grew 1-1/2 percent, and that’s good news. Because that is comfortably below the Federal Reserve’s target inflation rate of no more than 2 percent. The Fed seeks to steer a course that keeps inflation low and employment as high as possible. Those two objectives sometimes are at odds. The central bank sets a benchmark interest rate for borrowed money and control of that rate is the Fed’s major policy tool to try to keep inflation under control. Low inflation should mean the Fed feels no pressure to raise interest rates anytime soon.

REICHARD: One quick note on economic growth: The Commerce Department’s Bureau of Economic Analysis typically issues three different estimates of Gross Domestic Product, each one spaced out by about a month: So last week, the government issued its second revision for first quarter GDP, and it’s pretty close to the original estimate, although slightly lower. It’s still above three percent, 3.1 to be precise, and still the best Quarter One in four years.

EICHER: On Wall Street, another losing week, wrapping up a losing month of May.

Back in April, the major stock indexes had hit record highs. But it’s been downhill four straight weeks, as the trade war between the United States and China escalated with no end in sight.

The Standard & Poor’s 500 fell 2.6 percent on the week and that brought the index down 6.6 percent for May.

That shaved more than 40 percent off the S&P 500’s gains on the year.

The Dow Jones Industrial Average lost more. It was down a full 3 percent on the week. The Nasdaq lost 2.4 percent and the Russell 2000 3.2.

And that is today’s Monday Moneybeat.

(AP Photo/Richard Drew) Trader John Doyle works on the floor of the New York Stock Exchange, Thursday, May 30, 2019. 

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