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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | Personal income increased 0.5% in March |
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Implications: Today's report on personal income and spending shows inflation, but not stagflation. Despite substantially higher gas prices, "real" (inflation-adjusted) consumer spending expanded at a 2% annual rate in March and at a nearly 7% annual rate including upward revisions to prior months. In the first three months of the year, real spending is up at a healthy 3.1% annual rate. Meanwhile, nominal consumer spending is accelerating: up 4.6% versus last year but up at a 7.9% annual rate in the past three months. Certainly, inflation is a growing problem: overall consumption prices are up at a 4.7% annual rate in the past three months. Our point is that, so far, the economy is clearly weathering the oil-price storm. Much of that is due to higher private-sector earnings, where wages, salaries and small business profits are up 5.6% versus a year ago. In addition, consumer balance sheets are healthier and financial obligations (monthly payments like mortgages, rent, car loans/leases, as well as other debt service) are the smallest share of disposable income since 1995.
Click here for the full report.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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