The headline data this month good year-over-year growth in income – with expenditures year-over-year growth now below income growth – with the savings rate remaining historically low.

Analyst Opinion of Personal Income and Expenditures

The savings rate declned and is at 21st century lows.

Consumer spending growth was lower than income growth year-over-year.

The backward revisions this month were mixed.

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 0.5 % +0.3 % +0.4 % Consumer Spending – M/M change 0.3 % to 0.8 % +0.5 % + 0.4 % 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 1.7 % to 2.0 % +1.7 % + 1.7 % Core PCE price index – Yr/Yr change 1.5 % to 1.7 % +1.6 % + 1.5 %

The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is slowing while consumption’s growth rate is also slowing.

Real Disposable Personal Income is up 2.1 % year-over-year (published 1.9 % last month and revised to 1.8 %), and real consumption expenditures is up 1.7 % year-over-year (published 2.7 % last month and revised to 1.8 %)

The 4Q2017 GDP estimate indicated the economy was expanding at 2.6 % (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 declined to 2.4 % this month [last month it was published the savings rate was 2.9 % – and is now revised to 2.5].