Consumer Spending Sees Slowest Growth since May 2014

(Negative) Real consumer spending in March 2016 was $11,397 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 sixth month in a row that the rate of growth was below 3.0 percent, which is below the historic average of 3.3 percent. The annual rate of growth remained at 3.0 percent for the third straight month, which is the slowest rate of annual growth since January 2015. The growth rate has decelerated since July 2015. And, it appears that the growth rate is poised for even slower growth in the upcoming months.

While growing faster than total consumer spending, durable goods spending also has grown at a slower rate recently. In March, durable goods spending grew 3.0 percent compared with one year ago. This was easily the slowest rate of growth since February 2014. The annual rate of growth, now 5.2 percent, has decelerated since May 2015 and was at its slowest rate of growth since September 2014. Also, the annual rate of growth was below the historic averagefor the second 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 last four months.

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.