The biggest gain in nearly a decade! https://t.co/S65GVSjVds— Sean Duffy (@RepSeanDuffy) April 29, 2019
Duffy is referring to this section, which mirrors strong retail sales figures from March, that kept the consumer sector from flatlining for the first quarter in 2019.
In March, real [Personal Consumption Expenditures] increased $87.4 billion, which reflected a $66.3 billion increase in spending on goods and an increase of $27.9 billion in spending on services. Within goods, increases were widespread, with spending on motor vehicles and parts the leading contributor. Within services, the largest contributor to the increase was spending on health care.What Duffy didn’t talk about was the other part of this report, which told about two more months of lagging income growth.
Personal income increased $11.4 billion (0.1 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $0.6 billion, (less than 0.1 percent) and personal consumption expenditures (PCE) increased $123.5 billion (0.9 percent).And as I mentioned with the GDP report on Friday, the inflation data reported by the BEA is suspiciously soft, as the Consumer Price Index rose by a total of 0.6% over those two months as gas prices jumped around the country. And income growth couldn’t even keep up with that.
Real DPI decreased 0.2 percent in March, and real PCE increased 0.7 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased less than 0.1 percent…
Real DPI increased less than 0.1 percent in February, and real PCE decreased less than 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
One sector that had especially bad news on the income front should come as no surprise to people in Wisconsin.
Personal income for farmers fell by the most in three years in the first quarter, as losses to U.S. agriculture mount from President Donald Trump’s trade wars.And maybe that can allow those of you not in farming to feel a little better about the economy, but non-farm business owners have also seen their incomes drop by nearly 9 billion since November.
The Commerce Department on Monday cited the steep decline in farm proprietors’ income as a key factor weighing on the nation’s overall personal income growth in March, even though agricultural producers represent only about 2 percent of total employed Americans.
When you combine the higher spending in the US with the country’s flatlining incomes, the amount of personal saving has fallen by nearly $200 billion since the end of 2018. Which means the savings rate is back down toward the lower levels that we'd seen in most of Trump's presidency.
So again, which side is the true indicator of where the economy stands? Is it the sizable increase in consumer spending, which then translates into more economic activity in other sectors? Or is it the flat income levels and lower savings rate, which threaten to slow down the consumer economy as people stop seeing gains in their paychecks and standard of living?
I’ll say this, for an economy that’s allegedly growing by 3%, there sure is a lot of shakiness.