Consumer Income Up, Spending Down; Serious Mortgage Delinquencies, Consumer Sentiment Down

Americans’ personal income increased 0.3 percent in April compared with March. The single-family serious delinquency rate declined from 2.2 percent in March to 2.3 percent in April. U.S. consumers ended May a little more grumpy than at the end of April.

The Bureau of Economic Analysis reported on Monday that Americans’ personal income increased $43.7 billion, or 0.3 percent, in April compared with March. Real disposable personal income – everyone’s favorite kind, namely income after taxes — increased 0.2 percent in April, compared with a rise of 0.3 percent in March.

People didn’t run out and spend the extra dosh, however. The BEA also reported that personal consumption expenditures (PCE) decreased $8.1 billion, or 0.1 percent. In fact, real PCE – which is PCE adjusted to remove price changes — decreased 0.3 percent in April, in contrast to an increase of 0.8 percent in March.

Instead of spending more, April was a month for saving a little more. Personal saving was $518.1 billion in April, compared with $464.4 billion in March. The personal saving rate — personal saving as a percentage of disposable personal income — was 4 percent in April, compared with 3.6 percent in March.

Serious Mortgage Delinquencies Continue to Edge Down 

Fannie Mae reported on Friday that the single-family serious delinquency rate for the mortgages that it owns or guarantees declined from 2.19 percent in March to 2.13 percent in April. The serious delinquency rate is down from 2.9 percent in April 2013, and the latest rate happens to be the lowest one since November 2008 (the peak was 5.59 percent in February 2010).

Similarly, earlier last week Freddie Mac reported that that its single-family serious delinquency rate declined from 2.2 percent in March to 2.1 percent in April. Freddie’s rate is down from 2.9 percent in April 2013, and at its lowest since February 2009 (the peak was in February 2010, when it came in at 4.2 percent).

A seriously delinquent mortgage, according to the GSEs, is one that’s either three months behind in payments, or actually in foreclosure. If the drop in serious delinquencies continues at about the same rate as it has been in recent years, they will be below 2 percent later this year, and at 1 percent or lower by the end of 2015. An historically “normal” serious delinquency rate is under 1 percent.

Consumer Sentiment Down in May 

U.S. consumers ended May a little more grumpy than at the end of April, according to the University of Michigan on Friday. The university’s consumer sentiment index came in at 81.8 at the end of May, compared with 84.1 at the end of April. Both the current conditions and the expectation components were down.

Wall Street had a tepid day on Friday, and ended mixed. The Dow Jones Industrial Average gained 18.4 points, or 0.1 percent, and the S&P 500 advanced 0.2 percent. The Nasdaq dropped 0.13 percent, however.