The Commerce Department will release its personal income and outlays report on Friday, which includes economic temperature checks like consumer spending and inflation. 

Analysts expect that consumer spending increased 0.6% in March, an uptick from the previous month, as demand remains high despite precipitous price increases. Increased consumer spending indicates a hot economy, which some fear is overheating. 

Here are 5 things to look for in the March personal income and outlays report: 

1. The inflation keeps coming and it won’t stop coming

Maybe you’re tired of hearing about inflation, but it’s not done with us yet. The personal income report includes the personal consumption expenditures index, the Fed’s preferred inflation measure. 

Including energy and food costs, analysts expect that prices rose 6.4% in March compared to last year. That’s the same inflation rate as February, which could be a good sign that price hikes are on track to slow. 

Still, inflation remains at historic highs. The Fed is signaling that it plans to be more aggressive with its main inflation-fighting tool: interest rates. Rather than raise them by the quarter percentage points it initially predicted, the Fed may go hard(er) and raise rates by 0.5% two times over the next two months, so stay tuned. 

2. Did spending really continue… 

For all the griping about inflation, analysts estimate that Americans continued to fork over their money in March. Consumers not only bought necessities like food and gas, but things they were unable to buy for two years, like plane tickets or dinners at restaurants. 

The restaurant industry, which took a major hit during the pandemic, is now bearing the brunt of our inflation woes – higher prices, plus supply chain issues and labor shortages, are squeezing the business owners and forcing them to raise prices. 

And yet, Americans are returning to restaurants. This is great news for the hospitality sector, and for people looking for work. 

But high demand for services at higher prices may be fueling the overheated economy, which is why the Fed feels the need to step in so aggressively to curb inflation. 

3. … while real spending slowed?

“Real” spending is what economists call the amount consumers spend adjusted for inflation. Taking higher prices into account, economists expect that Americans decreased their spending in March. This may not be a bad sign, says Scott Brown, chief economist at Raymond James & Associates. 

“The economy has to slow down,” said Brown. “If higher inflation reduces or dampens consumer spending to some extent, that’s probably pretty welcome at this point to keep the economy at a more sustainable pace.”

4. We ain’t broke (yet), but please fix it 

The consumer spending versus “real” consumer spending trick is mirrored in personal income. While nominal (unadjusted for inflation) wages have increased steadily, real income has not. 

And nominal wages have not risen at pace with inflation. All of this indicates that while prices keep going up, consumers have less and less purchasing power. Analysts expect this trend continued in March. 

The drop in real income is also due to the end of pandemic relief packages like expanded unemployment benefits and tax credits. 

This disparity is “a bit of a concern, obviously the longer it lasts,” says Brown. 

5. Saving? That’s so 2020

And finally, one tidbit in Friday’s report that indicates normalcy amid all this inflated chaos is the savings rate. In normal times, Americans’ savings rate is around 7%. In 2020, due to…well, everything, it jumped to 16%. 

Now, without stimulus checks or travel restrictions, Americans’ savings accounts look a little more normal.

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