Category: Consumer

Personal income increased a very light $3.5 billion in June which was only 5% of the previous month gain of $67.1 billion. The rate of increase in personal income has been in decline since November 2014. It is still expanding in absolute terms, but at a lower rate of expansion. We know, the longer an expansion takes place, the more difficult a higher rate becomes. Personal income must continue to increase for an expanding economy.

Personal income increased $67.1 billion which was better than the previous month increase of $58.4 billion. Disposable personal income increased by $71.7 billion which was also better than the previous month of a $56.5 billion increase. The Personal Consumption Expenditure measure also increased by $7.3 billion which is the favorite measure of the current Federal Reserve. The personal savings rate increased 0.2 percentage points to 5.5% up from 5.3%. Personal income data was encouraging and not necessarily inflationary.

Consumer debt is increasing; that is a fact. However, it has been increasing since 1980 except for a few brief periods. In the early 1990’s there was a period of zero and slight negative growth and then again in 2008 as the mortgage crisis set in. Otherwise, expansion has been the norm. Certainly, the current rate of expansion is higher than most previous time periods which leads to the question of whether or not the consumer can afford the credit outstanding? Is the consumer overextended, or is credit increasing as a result of increased income or confidence?

Retail sales increased for the month and year-over-year. Sales increased by 0.4% for the month of April and 4.5% since this time last year. Online sales are increasing at a rapid rate of 10.7% from last year while department store sales fell 5.2% over the same period of time. If retails sales continue to increase at this rate it will be considered inflationary. This would make the Federal Reserve very happy.

Consumer confidence dropped 4.6 percentage points to 120.3 from 124.9 in April. This remains a good number considering the previous month, March, was a sixteen-year high. Confidence is much higher than it was last year.