Consumer Spending Growing at Fastest Rate since October 2006
Real consumer spending in May 2015 was $11,277 billion real dollars (seasonally adjusted at an annual rate). Last month consumer spending data was generally revised down, but this month it was generally revised up. The month-over-month rate of growth in consumer spending was 3.4%, which was the fastest since October 2006. Because of the revisions, the growth rate has accelerated the last two months. The annual rate of change accelerated to 2.9 percent, which was the fastest rate of growth since January 2007. The annual rate of change has been slowly but steadily accelerating since November 2012. Given the trend in incomes, spending should continue to grow faster.
Durable goods spending was also revised higher. A significant reason for this was spending on cars. Although some analysts are getting worried about the use of sub-prime loans in the automotive industry to boost sales. Durable goods spending grew 7.5 percent in May, which was the fastest rate of growth since January. The annual rate of growth has virtually constant at 7.7 throughout 2015. This was nearly 50 percent the historical average growth rate. In May, durable goods spending made up 13.4 percent of all consumer spending. That was an all-time record, which was largely due to historically low interest rates that shift spending to durable goods from non-durable goods.
Real consumer spending (or its sub-components such as medical care spending) is an important leading for a number of durable goods end markets: construction materials; custom processors; durable goods; food/beverage processing; forming/fabricating (non-auto); hardware; HVAC; industrial motors/hydraulics/mechanical components; machinery/equipment manufacturing; medical; metalcutting job shops; oil/gas field/mining machinery; power generation; primary metals; and printing.
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