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).
![](https://www.riceoweek.com/wp-content/uploads/2018/04/z-temp48.png)
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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