Consumer Spending Growth Decelerating

Real consumer spending in December 2015 was $11,345 billion real dollars (seasonally adjusted at an annual rate). As is the case almost every month, this was an all-time high in consumer spending. The month-over-month rate of growth in consumer spending was 2.6 percent. This was the fifth month in a row that the rate of growth was below the historic average of 3.3 percent. And, the rate of growth in December was the slowest since May 2014. The annual rate of growth decelerated was unchanged at 3.1 percent. It has decelerated for five straight months and is growing at its slowest rate since March 2015.

Durable goods spending dropped slightly from its all-time high last month. Tthe month-over-month rate of growth, now at 5.0 percent, fell to its slowest rate since June 2015. The annual rate of growth decelerated to 6.0 percent, which is the slowest rate of growth since December 2014. The rate of growth has decelerated since its peak rate of growth of 7.0 percent in May. Durable goods spending was 13.2 percent of all consumer spending. As real interest rates have been rising, durable goods spending is no longer making up an increasing percentage of all consumer spending.

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.