Income Growth above 4% for Second Month
February real disposable income was $12,278 billion dollars (seasonally adjusted at an annual rate). This was the highest level of disposable income ever. In addition, the month-over-month rate of growth was 4.0% in February, which was the second month in a row this was the case. Excluding a few months that were artificially inflated due to tax law changes, this was the first time with consecutive months of more than 4.0% growth since October-November 2006. The historical average month-over-month rate of change is 3.1%. February was the third month in a row of above average growth. This pushed the annual rate of growth to 2.8%, which was the fastest rate of growth since January 2013. We should see further acceleration in the annual rate of change over the next few months. This was a very positive report for the future of durable goods manufacturing.
Real disposable income is one of the earliest leading indicators for the following end markets: aerospace; construction materials; custom processors; electronics/computers/telecommunications equipment; food/beverage processing; forming/fabricating (non-auto); hardware; HVAC; industrial motors/hydraulics/mechanical components; machinery/equipment manufacturing; metalcutting job shops; oil/gas field/mining machinery; power generation; primary metals; and printing.
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