Real consumption is surprising, but the biggest personal income transfer is surprising, as well as downward revisions (and a lower Q1 GDP revision).
Figure 1: NFP employment (blue), employment with population smooth controls (bright orange), industrial production (red), personal income excluding current transfers in Ch.2017$ (bright green), manufacturing and trade sales in Ch.2017$ (black), and monthly GDP in Ch.2017$ (pink), GDP (blue bars to in 202M), all in 2020. Source: BLS via FRED, BLS, Federal Reserve, BEA 2026Q1 2nd release, S&P Global Market Insights (with Macroeconomic Advisers, IHS Markit) (5/7/2026), and author’s calculations.
Note that personal income (which closely tracks personal income transferred over the past 6 months) is not only surprisingly on the downside (-0.4% vs. 0.0% m/m), but was revised down significantly. Therefore, the past transfer of personal income in the current data period seems to have increased in September 2025 (as opposed to January 2026 in the previous harvest). If this income contour appears rigid in later releases, this will be important as personal money transfers are the variables tracked by the NBER’s Business Cycle Dating Committee (BCDC).
Employment (non-agricultural employment from the establishment survey, and civilian employment from the household survey) both contribute to the BCDC determination of changes, with (historically) more weight on the former, given its lower volatility and sampling error. However, with recent developments in the labor market (reduced immigration and hence lower employment growth rate, and valuation problems), it is not clear how the BCDC will view the latest decline (as in NFP) or decline (as in the domestic series). Definition of home series (FRED mnemonic CE16OV) is further complicated by the fact that the January 2026 forward data includes new population controls; the change in civilian employment from December 2025 to January 2026 needs to be taken with more caution.
To see how the labor market is trending, I include private NFP from ADP in Figure 2; this series confirms the slow growth of NFP. The population employment series adjusted for the NFP concept shows the overall trend of population employment – peaking at the end of 2025.
Figure 2: Employment adjusted for the NFP concept of smooth population control (bright orange), manufacturing output (red), private ADP non-farm employment (green), real retail sales, deflated CPI (black), goods services indicators (brown), and coincident index in Ch.2017$ (pink), GDO (green bars), all log normalized is 20=2010. Source: BLS, ADP, via FRED, Philadelphia Fed [1]Philadelphia Fed [2]Bureau of Transportation Statistics, Federal Reserve via FRED, BEA 2026Q1 second release, and the author’s figures.
It is interesting that the consumption shows a continuation or the growth slows down. Continued consumption growth in the face of a lack of income seems absurd; however, it makes sense if domestic wealth continues its upward trajectory (as discussed in yesterday’s post). The S&P 500 rallied again in April, and continued, through May.
It is reiterated that the monthly data reported for April are all preliminary, and revised figures incorporating additional information will be published monthly. April’s personal income, consumption, employment may force some change in the view provided by these two graphs.
As of today, GDP (GDO) [GDP+} grew by 1.6% (1.3%) [?] in Q1 (SAAR), while final sales to private domestic consumers (“core GDP”) grew by 2.4%. GDPNow for Q2 is 3.8% (down 0.5 ppts from the previous release, due to consumption and reduced investment in goods).
