Tag: savings rate

Personal Spending Rebounded in August from Cautiousness in July

The Bureau of Economic Analysis said that personal spending rebounded in August after being unchanged in July. Personal spending increased 0.5 percent in August. Aside from the brief pause in July, consumers have been more willing to open their wallets since the weather-related storms in January. Indeed, since January, personal spending has risen 2.7 percent, with 4.1 percent growth year-over-year. The August consumption figure was boosted by strength in durable goods spending, which rose 1.8 percent for the month.

Meanwhile, personal income was also modestly higher, up 0.3 percent in August. Over the past 12 months, personal incomes have expanded by 4.3 percent. For manufacturers, total wages and salaries increased from $786.1 billion in July to $789.7 billion in August. This continues an upward trend for compensation in the sector, with average wages and salaries of $734.4 billion and $747.6 billion in 2012 and 2013, respectively.

With the pace of spending growth outpacing income growth in August, the savings rate edged down from 5.6 percent in July to 5.4 percent in August. Still, the longer term trend reflects upward movement in the savings rate, up from 4.1 percent in December.

In other news, the personal consumption expenditure (PCE) deflator was unchanged in August, with falling energy prices helping to reduce inflationary pressures. Nonetheless, food costs continue to move higher, up 0.3 percent in the month. On a year-over-year basis, the PCE deflator has increased 1.5 percent, down from 1.7 percent in May. Core inflation (which excludes food and energy costs) was also at a 1.5 percent pace in August. While pricing pressures have accelerated somewhat from earlier in the year, the recent easing will provide a little breathing room to the Federal Reserve as its seeks to normalize its policies.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Spending Data in July Show a Cautious Consumer Despite Recent Economic Progress

The Bureau of Economic Analysis said that personal spending fell 0.1 percent in July, its first decline since the weather-related storms in January. This finding mirrors recent news of flat retail sales in July, showing the consumer still cautious despite recent economic progress. Purchases of durable and nondurable goods fell by 0.7 percent and 0.1 percent, respectively, in July, with service-sector spending unchanged for the month. Nonetheless, personal spending has increased at an annualized 4.1 percent pace over the past six months. Hopefully, July’s figures represent a pause in what has otherwise been decent growth in consumer spending this year.

Personal income growth also eased to its slowest pace of 2014, down from 0.5 percent in June to 0.2 percent in July. Still, it was the seventh consecutive monthly increase in income growth, with personal incomes up 3.3 percent since December or 4.3 percent over the past 12 months. For manufacturers, total wages and salaries were unchanged at $787.3 billion in July, but they have risen 4.2 percent year-to-date (up from $755.3 billion in December).

The savings rate moved higher, up from 5.4 to 5.7 percent, with personal spending declining. That was the highest savings rate since December 2012. The rate has gradually moved higher so far this year, up from 4.1 percent in December.

In other news, the personal consumption expenditure (PCE) deflator eased somewhat in July, up 0.1 percent relative to 0.2 monthly percent gains from March through June. This reflects an increase in food prices (up 0.4 percent) that was mostly offset by a decline in energy prices (down 0.3 percent). The year-over-year pace was unchanged at 1.6 percent, with core inflation (which excludes food and energy costs) remaining at a 1.5 percent annual pace.

The Federal Reserve prefers the PCE deflator as its measure of inflation, and as such, it will welcome the news that pricing pressures have decelerated slightly over the summer months. At the same time, consumers will likely focus on the fact that both food (up 2.0 percent) and energy (up 2.4 percent) costs have risen modestly over the past 12 months, a pocketbook issue that they will notice when making purchases.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Income and Spending Rose Modestly in June

The Bureau of Economic Analysis said that personal income and spending both increased by 0.4 percent in June, building on the gains seen in May. Regarding compensation, personal income has risen for sixth straight months, or every month so far in 2014. Since December, personal income was up 3.0 percent, with 3.9 percent growth over the past 12 months. For manufacturers, total wages and salaries increased from $781.8 billion in May to $786.1 billion in June. Manufacturing wages and salaries have moved up from averages of $734.4 billion and $747.6 billion in 2012 and 2013, respectively.

Meanwhile, personal spending has expanded for five straight months, rebounding from winter-related softness in January. Since January, personal spending has risen by 2.2 percent, with year-over-year growth of 4.0 percent. That suggests that Americans continue to spend at a decent pace, even if their purchase decisions remain selective and perhaps still cautious. In June, growth in durable goods spending (up 0.5 percent) was outstripped by strong gains in nondurable goods purchases (up 1.0 percent).

The savings rate was unchanged at 5.3 percent. That represents an increase from the 4.1 percent pace observed in December, and in general, we have seen a slightly higher saving rate through the first six months of 2014 (averaging 5.1 percent) than what was observed for all of 2013 (4.9 percent).

In other news, the personal consumption expenditure (PCE) deflator found that pricing pressures eased somewhat in June, even as prices remained higher than earlier in the year. The year-over-year pace of consumer goods prices dropped from 1.9 percent to 1.7 percent, but this still represented an increase from the 1.0 percent noted in February. Core inflation, which excludes food and energy costs, have grown 1.6 percent over the past 12 months, down from 1.7 percent. Energy costs were up 1.7 percent in June, led by increased petroleum prices stemming from geopolitical events in the Middle East.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Monday Economic Report – May 12, 2014

Here is the summary for this week’s Monday Economic Report:

In her testimony before the Joint Economic Committee last Wednesday, Federal Reserve Chair Janet Yellen discussed progress to date in the economy since the recession and touched on some of the weaknesses during the first quarter of this year. Specifically, she said the following:

Although real GDP growth is currently estimated to have paused in the first quarter of this year, I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather. With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter. One cautionary note, though, is that readings on housing activity—a sector that has been recovering since 2011—have remained disappointing so far this year and will bear watching.

The Federal Reserve expects real GDP to grow 2.8 percent to 3.0 percent this year, and for that to happen, it would suggest a relatively strong rebound in activity in the coming months. This is particularly true given the stagnant growth in the first quarter. Nonetheless, the Federal Open Market Committee continues to worry about sufficient “slack” in the labor market, even with recent progress. Weak manufacturing job openings figures tend to support this view. Yellen testified that “a high degree of monetary accommodation remains warranted.” The Federal Reserve is expected to maintain historically low short-term interest rates for the foreseeable future, with rates starting to rise sometime in 2015. Regarding its asset purchasing program, it is anticipated to wind down by this autumn.

Consumers, meanwhile, remain hesitant to take on too much credit card debt, a deleveraging trend that we have seen throughout the economic recovery. While consumer credit outstanding rose 6.7 percent in March, the bulk of that increase stemmed from gains in nonrevolving loans. Nonrevolving credit, which includes auto and student loans, has increased 7.8 percent over the past 12 months. Yet, revolving credit, which includes credit cards and other credit lines, was up just 0.85 percent year-over-year. However, consumers are continuing to increase their spending, but they might be dipping into savings more to make these purchases, with the savings rate down to 3.8 percent in March. This was off from an average of 5.3 percent and 4.5 percent in 2012 and 2013, respectively.

On the trade front, manufactured goods exports have risen at a very slow 1.1 percent pace in the first quarter relative to the same time frame in 2013. This continues the deceleration in the growth rate for manufactured goods exports that we have seen over the past two years, with 2014 year-to-date growth down from last year’s 2.4 percent pace. On the positive side, exports of U.S.-manufactured goods to many of our largest trading partners rose in the first quarter of 2014. However, exports to our largest trading partner (Canada) remain soft, down 0.4 percent in the first three months of this year versus last year. We remain hopeful that exports will improve in the coming months. For more on international trends, see the latest Global Manufacturing Economic Update, which was released on Friday.

There will be a lot of new data out this week to digest. Several indicators will show the health of the manufacturing sector in the United States, including April readings on industrial production and new May surveys from the New York and Philadelphia Federal Reserve Banks. They are expected to show modest pickups in demand and output, building on recent rebounds. The other key figure to watch—particularly with the attention given to it in Yellen’s testimony and in the media—will be housing starts. Consensus estimates for new residential construction reflect some easing from March’s 946,000 unit annualized pace, probably down to around 910,000 to 920,000. Other highlights this week include new data on consumer confidence, consumer and producer prices, retail sales, small business sentiment and state employment.

Chad Moutray is the chief economist, National Association of Manufacturers. 

top export markets growth YTD - may2014

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Spending Jumped Higher in March, Building on the Rebound of February

The Bureau of Economic Analysis said that personal spending rose 0.9 percent in March, building on the 0.5 percent rebound of February. This followed weaker consumer spending in December and January, mostly attributable to severe winter weather. Pent-up demand for big ticket items, including autos, helped to drive durable goods spending up 2.6 percent. Nondurable goods and service sector spending were also higher, up 0.8 percent and 0.7 percent, respectively.

Personal spending has grown 4.0 percent since March 2013, its fastest pace in nearly two years. As such, it also represented an acceleration in consumer purchasing activity since last fall. The year-over-year growth rate was 2.9 percent as recently as September, for instance.

Meanwhile, personal income has increased for three straight months, up 0.5 percent in March. Total wage and salary disbursements were up 0.6 percent for the month, or 3.7 percent over the past 12 months. For manufacturers, wages and salaries increased from $758.1 billion to $765.1 billion. Six months ago (in September), wages and salaries in the sector were $750.7 billion, and they have moved up from averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.

With spending growth outpacing income, the savings rate declined from 4.2 percent in February to 3.8 percent in March. This was the lowest savings rate since January 2013, and we have generally seen this rate decelerate over much of the past year. For instance, the savings rate dropped from an average of 5.3 percent through the first 11 months of 2012 (omitting December because of accelerated payouts due the fiscal cliff) to 4.5 percent in 2013.

Overall inflationary pressures remain minimal, with prices for core personal consumption expenditures (PCE) up just 1.1 percent year-over-year. Therefore, inflation remains below the Federal Reserve’s 2 percent target rate, which frees the Fed up to pursue its highly accommodative policies.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Income and Spending Both Rose Modestly in February

The Bureau of Economic Analysis said that personal income and spending both increased by 0.3 percent in February, extending the modest gains of January. After weather-related softness in December, the data have been more favorable in the first two months of 2014. On a year-over-year basis, each of these measures has risen 3.0 percent. This compares to personal income growth of 2.9 percent in 2013, with a 3.2 percent pace for personal spending last year. (If you were to omit December, which was an outlier month due to the fiscal cliff the year before, personal income growth would have also been 3.2 percent.)

The increase in spending in February stemmed from both nondurable goods and services, both of which increased 0.3 percent for the month. Durable goods purchases fell for the third straight month, down 0.2 percent in February. It is likely that poor weather conditions negatively impacted these figures, with other releases showing weak spending for automobiles and other items from December to February.

Meanwhile, wages and salaries were up 0.2 percent in February, rising 3.1 percent over the past 12 months. For manufacturers, there was some softness on the wage front, likely due to weather-related slowdowns. Indeed, manufacturing wages and salaries have fallen from $758.0 billion in November to $754.2 billion in February. Prior to that, compensation had been rising, particularly as activity had picked up. For instance, wages in the sector averaged $707.1 billion, $735.4 billion, and $747.8 billion in 2011, 2012, and 2013, respectively.

The savings rate edged slightly higher, up from 4.2 percent in January to 4.3 percent in February. Still, we have generally seen this rate decelerate over the past year. The savings rate dropped from an average of 5.3 percent through the first 11 months of 2012 to 4.5 percent in 2013.

Overall inflationary pressures remain minimal, with prices for core personal consumption expenditures (PCE) up just 0.9 percent year-over-year, down from 1.2 percent last month. Energy prices had risen in December and January on increased home-heating costs, but these eased a bit in February, down 0.4 percent.  Inflation remains below the Federal Reserve’s 2 percent target rate, which frees the Fed up to pursue its highly accommodative policies. If anything, there are some who argue that disinflationary pressures might be a concern, but that is less true in the U.S. than it is in Europe.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Income and Spending Bounced Back in January, but Goods Purchases Were Lower

The Bureau of Economic Analysis said that personal income and spending bounced back in January after weaknesses seen in December. Consumer spending rose 0.4 percent in January after increasing just 0.1 percent the month before. Year-over-year growth in personal spending also edged higher, up from 3.2 percent to 3.45 percent, its fastest pace since December 2012. Nonetheless, the news was not as good for manufacturers as the headline figure might suggest.

The increase in spending in January stemmed entirely from services, up 0.9 percent for the month. In contrast, durable and nondurable goods spending were both lower, down 0.3 percent and 0.7 percent, respectively. It was the second consecutive monthly decline for durable goods spending, which declined 2.6 percent in December. It is likely that poor weather conditions negatively impacted these figures, with other releases showing weak spending for automobiles and other items over these two months.

Meanwhile, personal income increased 0.3 percent in January, an improvement from being unchanged in December. Total wage and salary disbursements were up 0.2 percent for the month, or 3.6 percent over the past 12 months. For manufacturers, wages and salaries have been essentially flat over the past three months, hovering around $758 billion. The figure has gradually moved higher over the longer-term, however. Six months ago, wages and salaries in the sector were $742.5 billion, and they have moved up from averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.

The savings rate remained at 4.3 percent in January for the second straight month, and we have generally seen this rate decelerate over much of the past year. For instance, the savings rate dropped from an average of 5.3 percent through the first 11 months of 2012 (omitting December because of accelerated payouts due the fiscal cliff) to 4.5 percent in 2013.

Overall inflationary pressures remain minimal, with prices for core personal consumption expenditures (PCE) up just 1.1 percent year-over-year. Energy prices were up 0.4 percent in January, or 3.5 percent over the past 12 months, as more Americans needed to heat their homes due to cold weather conditions. Nonetheless, inflation remains below the Federal Reserve’s 2 percent target rate, which frees the Fed up to pursue its highly accommodative policies.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Personal Spending Rose Modestly in December, But Incomes Were Flat

Personal incomes were unchanged in December, according to the latest data from the Bureau of Economic Analysis. For the fourth quarter, incomes were up just marginally, increasing a very modest 0.1 percent. For the year of 2013 as a whole, personal incomes rose 2.8 percent, below the 4.2 percent gain observed in 2012.

For manufacturers, total wages and salaries increased from $760.9 billion in November to $763.6 billion in December. Average manufacturing wages and salaries for 2013 were $749.3 billion, up 1.9 percent from $735.4 billion in 2012.

Meanwhile, personal spending rose 0.4 percent in December, extending the 0.6 percent increase seen in November. Overall, consumers spent 1.1 percent more in the fourth quarter, with a gain of 2.0 percent for all of 2013. This was slightly below the 2.2 percent increase observed in 2012.

December’s higher personal spending figure stemmed largely from a significant jump in nondurable goods activity, up 1.5 percent for the month. In contrast, personal durable goods spending declined 1.8 percent, offsetting the 1.8 percent jump in November. Looking at the entire year, however, durable goods spending growth outpaced that for nondurable goods, 7.1 percent to 2.1 percent.

With personal incomes flat for the month, the savings rate fell from 4.3 percent in November to 3.9 percent in December. This was the lowest rate in 11 months, and it was the third consecutive monthly decrease, down from 5.1 percent in September.

The other notable item to report from this release was the personal consumption expenditure (PCE) data, which looks at consumer inflation. The Federal Reserve prefers this measure when looking at pricing pressures. Year-over-year growth in the PCE has edged somewhat higher over the past couple months, up from 0.7 percent in October to 0.9 percent in November to 1.1 percent in December. Yet, this still suggests that inflation remains largely in-check, at least for now. Core inflation — which excludes food and energy — has risen just 1.2 percent over the past year, which remains well below the Fed’s stated target of 2 percent.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


November Personal Spending Increased Modestly Led by Strong Growth in Durable Goods

The Bureau of Economic Analysis said that personal spending growth grew 0.5 percent in November, extending the 0.4 percent gain seen in October. Consumer spending has increased 3.5 percent over the past 12 months, its fastest pace so far in 2013 and an improvement from the 2.9 percent year-over-year rate in September. Nonetheless, it is clear that personal spending growth has decelerated from the 4.1 percent pace average of 2012 to the 3.1 percent average year-to-date in 2013.

Looking specifically at the November data, the growth in personal goods spending stemmed from an increase in durable goods expenditures. Spending on durable goods increased from an annualized $1.282 trillion in October to $1.307 trillion in November. Meanwhile, purchases of nondurable goods declined in the month from $2.667 trillion to $2.657 trillion.

Both durable and nondurable goods spending continue to increase over a longer term. Six months ago (May), for instance, durable and nondurable goods purchases were $1.255 trillion and $2.585 trillion, respectively.

Meanwhile, personal income rebounded in November, rising by 0.2 percent after falling 0.1 percent in November. Much of October’s decrease had been attributable to a sharp falloff in farm proprietors’ income, which was still down in November. But, it was offset by stronger growth in wages and salaries, which increased 0.4 percent for the month. For manufacturers, total wages and salaries rose from $754.3 billion to $759.1 billion. This figure has gradually moved higher. Six months ago, wages and salaries in the sector were $744.8 billion, and they moved steadily higher from the averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.

Perhaps disappointingly, the year-over-year pace of personal income continues to decelerate, down from 3.4 percent in October to 2.3 percent in November. In contrast to personal spending, this was the lowest annual pace of the year. Through the first 11 months of 2013, the annual pace has averaged 3.2 percent, down from the 4.2 percent rate experienced in all of 2012.

With personal spending outstripping personal income, the savings rate has fallen in each of the past two months, down from 5.1 percent in September to 4.5 percent in October to 4.2 percent in November.

Overall inflationary pressures remain minimal, with prices for personal consumption expenditures (PCE) unchanged for the second month in a row. The year-over-year rate of PCE growth was just 0.9 percent, and when you exclude food and energy, the annual rate of core PCE growth was 1.1 percent. Much as we have seen in recent consumer and producer price data, inflation remains below the Federal Reserve’s 2 percent target rate, which frees the Fed up to pursue its highly accommodative policies.

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


Modest Growth in Personal Spending on Goods in October

The Bureau of Economic Analysis said that personal spending growth rose modestly in October. Consumer spending increased 0.3 percent in October, the sixth straight month of gains in purchasing. The year-over-year pace strengthened from 2.6 percent in September to 2.8 percent in October. Still, it is clear that personal spending growth has decelerated from the 4.1 percent pace average of 2012 to the 3.0 percent average year-to-date in 2013.

Looking specifically at the October data, spending was higher for both durable and nondurable goods, up 0.6 percent and 0.3 percent, respectively.

Meanwhile, personal income fell 0.1 percent in October, the first decline since January. To be fair, however, much of that decrease was attributable to a sharp falloff in farm proprietors’ income. Wages and salaries rose 0.1 percent, and for manufacturers, total wages and salaries totaled $749.2 billion in October, up from $745.9 billion in September.  This figure has gradually moved higher, up from averages of $707.1 billion and $735.4 billion in 2011 and 2012, respectively.

The year-over-year pace of personal income has also eased, down from 3.9 percent in September to 3.4 percent in October. Through the first 10 months of the year, the annual pace has averaged 3.3 percent, down from the 4.2 percent rate experienced in all of 2012.

With personal spending outstripping personal income, the savings rate fell from 5.2 percent in September to 4.8 percent in October. Even with the slight decrease, the savings rate has edged higher in general as the year has progressed, with the year-to-date average being 4.6 percent. Nonetheless, the savings rate has generally been lower this year than last, when the saving rate averaged 5.3 percent from January to November 2012. (I omitted December due to accelerated payouts skewing the data in the lead-up to the fiscal cliff deal.)

Chad Moutray is the chief economist, National Association of Manufacturers.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)


A Manufacturing Blog

  • Categories

  • Connect With Manufacturers

            
  • Blogroll