April core PCE inflation cooled to 0.1% MoM and 2.5% YoY, its lowest since 2021, supporting the Fed’s wait-and-see stance. It’s the second straight month of easing, though analysts warn tariff effects aren’t fully priced in and could reverse the trend by summer. Meanwhile, real disposable income rose 0.7%, and the savings rate climbed to a one-year high—signs of resilience amid cautious spending.
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Housing told a different story: pending home sales plunged 6.3% in April, with sharp declines in the South and West. Inventory is rising, but high mortgage rates continue to sideline buyers. Even the Midwest, where prices remain more affordable, saw only a modest YoY gain in contract activity.
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However, consumer sentiment snapped a 5-month losing streak. The Conference Board’s Consumer Confidence Index jumped to 98.0 in May (vs. 86.0 est.), with optimism fueled by Trump’s temporary tariff halt and trade truce with China. The rebound was broad-based, but especially strong among Republicans and equity investors, 44% of whom now expect stocks to rise over the next 12 months.

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