Consumer Spending Growth under 3 Percent

Real consumer spending in June 2015 was $11,176 billion real dollars (seasonally adjusted at an annual rate). The month-over-month rate of growth in consumer spending was 2.9 percent, which was the slowest rate of growth and the first time the growth rate dipped below 3 percent since July 2014. While the annual rate of change ticked up to 3.2 percent, running its streak of accelerating growth to 22 months, it appears that consumer spending will hit its peak rate of growth in the next couple of months. This is especially true since incomes are starting to grow slower.

Durable goods spending slowed even more relatively. Durable goods spending grew 4.5 percent in June. This was the slowest rate of growth and the first time the month-over-month rate of growth fell below 5 percent since February 2014. The annual rate of change in durable goods spending was its slowest in five months. It appears that durable goods spending has clearly entered into decelerating growth mode.

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.