The headline data this month poor month-over-month growth in expenditures – but still with expenditures year-over-year growth well above income growth – with the savings rate remaining historically low (but improved this month).

Analyst Opinion of Personal Income and Expenditures

The savings rate improved but remains near 21st century lows.

Consumer spending growth is higher than income growth year-over-year.

The backward revisions are driving this analyst crazy. They continue to change the trends.

  • The market looks at current values (not real inflation adjusted) and was expecting (from Bloomberg):.
    •   Consensus Range Consensus Actual Personal Income – M/M change 0.3 % to 0.9 % +0.4 % +0.4 % Consumer Spending – M/M change -0.1 % to 0.4 % +0.2 % + 0.2 % PCE Price Index — M/M change 0.1 % to 0.2 % +0.2 % + 0.2 % Core PCE price index – M/M change 0.1 % to 0.2 % +0.2 % + 0.3 % PCE Price Index — Y/Y change 1.7 % to 1.7 % +1.7 % + 1.8 % Core PCE price index – Yr/Yr change 1.5 % to 1.6 % +1.5 % + 1.6 %
  • The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is improving while consumption’s growth rate is slowing.
  • Real Disposable Personal Income is up 2.1 % year-over-year (published 2.1 % last month and revised to 2.3 %), and real consumption expenditures is up 2.8 % year-over-year (published 2.8 % last month and revised to 2.8 %)
  • The 4Q2017 GDP estimate indicated the economy was expanding at 2.9 % (quarter-over-quarter compounded). Expenditures are counted in GDP, and income is ignored as GDP measures the spending side of the economy. However, over periods of time – consumer income and expenditure grow at the same rate.
  • The savings rate continues to be low historically, and improved to 3.4 % this month [last month it was published the savings rate was 2.4 % – and is now revised to 3.2].
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