Consumer Spending Growth Stays Below Average

(Negative) Real consumer spending in May 2016 was $11,500 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 2.7 percent. In seven of the last eight months the rate of growth has been below 3.0 percent. This is significantly below the historical average of 3.3 percent. The annual rate of growth remained at 2.9 percent for the third straight month, which was the slowest rate of annual growth since January 2015. The growth rate has decelerated since July 2015. It appears that the annual growth rate is poised for slightly slower growth in the upcoming months.

In May, durable goods spending grew 4.8 percent, which was somewhat below the historical average. The annual rate of growth, now 5.0 percent, has decelerated since its peak in May 2015. Also, the annual rate of growth was below the historic average for the fourth month in a row. A significant reason for the decelerating growth in durable goods spending was that motor vehicle and parts spending has contracted the five of the last six months. However, durable goods spending accounted for 13.4 percent of all consumer spending, which is its highest proportion ever.

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.