Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Personal Income Rose 0.2% in November, Personal Consumption Rose 0.5%
Posted Under: Data Watch • PIC

 
Implications: Spending surged in November and was revised up in September and October, back when the media was obsessed with stories of how a partial government shutdown was going to hurt consumer spending. In the past six months, consumer spending is up at a 4.8% annual rate; in the past three months, it's up at a 5.1% rate. We need to keep this in mind the next time politicians and pundits try to scare the public about lower government spending. Plugging these data into our models suggests "real" (inflation-adjusted) spending, will be up at a 4% annual rate in Q4 versus the Q3 average. Factoring in a potential slowdown in inventory accumulation, it now looks like real GDP is growing at a 2% annual rate in Q4. Personal income rose 0.2% in November, which was less than the consensus expected. But farm income, which can be volatile, fell again in November, holding the overall number down. Income is up a tepid 2.3% versus a year ago. But income gains were very strong late last year, temporarily making year-ago comparisons look weak. In the meantime, private-sector wages & salaries continue to grow and are up at a 3.9% annual rate in the past six months. Expect both income and spending to keep growing. Job growth will continue and, as the jobless rate gradually declines, employers will offer higher wages. Meanwhile, consumers' financial obligations are hovering at the smallest share of income since the early 1980s. (Financial obligations are money used to pay mortgages, rent, car loans/leases, as well as debt service on credit cards and other loans.) On the inflation front, the Federal Reserve's favorite measure of inflation, the personal consumption price index, was unchanged in November. Core consumption prices were up 0.1%. Overall consumption prices and core prices, which exclude food and energy, are up 0.9% and 1.1% respectively in the past year, both below the Fed's 2% target. However, we think inflation will move higher over the next year. QE was a mistake; the sooner it's over the better.

Click here for a PDF version
Posted on Monday, December 23, 2013 @ 11:28 AM • Post Link Share: 
Print this post Printer Friendly

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.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.