Income Growth above Average for Second Month
The last two months are the first time disposable income growth has been above its historic average since March 2011.
January real disposable income was $13,260 billion real dollars (seasonally adjusted at an annual rate). This was the highest level of disposable income ever. In addition, the month-over-month rate of growth was 4.2% in December. Excluding a few months that were artificially inflated due to tax law changes, this was the fastest month-over-monht rate of growth in disposable income since May 2008. The historical average month-over-month rate of change is 3.1%. This was the second month in a row of above average growth. This pushed the annual rate of growth to 2.6%, which was the fastest rate of growth since February 2013. We should see further acceleration in the annual rate of change over the next few months. This was a very positive report for the future of durable goods manufacturing.
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.