The headline data this month showed some growth in consumer income and spending – with expenditures year-over-year growth far outpacing income growth – and the savings rate remains historically low.

Analyst Opinion of Personal Income and Expenditures

The savings rate marginally improved but historically is extremely low.

Consumer spending continues to far outpacing income – not good news. Although this month income grew faster than expenditures.

The backward revisions this month were down.

  • The market looks at current values (not real inflation adjusted) and was expecting (from Bloomberg):.
    •   Consensus Range Consensus Actual Personal Income – M/M change 0.2 % to 0.4 % +0.3 % +0.4 % Consumer Spending – M/M change 0.2 % to 0.5 % +0.3 % + 0.3 % PCE Price Index — M/M change 0.1 % to 0.3 % +0.1 % + 0.1 % Core PCE price index – M/M change 0.1 % to 0.3 % +0.2 % + 0.2 % PCE Price Index — Y/Y change 1.5 % to 1.7 % +1.5 % + 1.6 % Core PCE price index – Yr/Yr change 1.4 % to 1.5 % +1.4 % + 1.4 %
  • The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is growing while consumption’s growth rate is slowing.
  • Real Disposable Personal Income is up 1.6 % year-over-year (published 1.2 % last month and revised to 1.1 %), and real consumption expenditures is up 2.6 % year-over-year (published 2.7 % last month and revised to 2.6 %)
  • The 3Q2017 GDP estimate indicated the economy was expanding at 3.3 % (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 marginally improved to 3.2 % this month [last month it was published the savings rate was 3.1% – and is now revised to 3.0].
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