Disposable Income Grows at Fastest Rate since 2012

According to the Bureau of Economic Analysis, October real disposable income was $12,002 billion real dollars (seasonally adjusted at an annual rate). This is the second highest level of income ever (only December 2012, which was artificially inflated due to tax law changes, was higher). The month-over-month rate of change in October was 2.5%. Prior to the downward revision of 2014 this would have been one of the slowest rates of growth this year. However, after the data revision, October had the fastest rate of month-over-month growth since 2012. The annual rate of change, now 1.4%, has grown at a faster rate every month in 2014. This is the fastest rate of annual growth in disposable income since September 2013. However, the rate of growth is still well below the historic average rate of growth in disposable income, which is 3.1%.

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.