Consumer Spending Growing Moderately

According to the Bureau of Economic Analysis, real consumer spending in November 2014 was $11,140 billion real dollars (seasonally adjusted at an annual rate). Once again, consumer spending was revised, this time mostly in September and October. The month-over-month rate of growth in consumer spending was 2.8%, which was the third fastest rate of growth since February 2011. This is still a little shy of the historic average growth rate. The month-over-month rate of change has been 2.5% the last four months and appears to be accelerating very slightly. The annual rate of change has bumped up slightly to 2.5% the last four months. 

Real disposable income, a good leading indicator for real consumer spending, has been growing at an accelerating rate throughout 2014. However, the annual rate of growth of growth is still relatively weak in historic terms. The rate of growth in consumer spending is significantly higher than the rate of growth in disposable income. However, these two curves usually track each other quite closely. Therefore, even if the rate of growth in incomes continues to accelerate, there may not be much improvement in the growth rate of consumer spending.

While total consumer spending has been growing at a consistent rate, real consumer durable goods spending growth is accelerating once again. The month-over-month rate of growth was 8.4%, which was the second fastest since December 2012. urable goods spending as a percent of all consumer spending hit a record level in November. In November, durable goods spending was 15.3% of all consumer spending.

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.