Consumer Spending Jumps 2.5% in December 2013

According to the Bureau of Economic Analysis, real consumer spending in December 2013 was $10,868 billion real dollars (seasonally adjusted at an annual rate). As is the case almost every month, real consumer spending hit a new all-time high in December. Spending in December 2013 was 2.5% more than it was in November 2012. Despite stagnant growth in incomes, this is the fastest rate of month-over-month growth since July 2011. That means consumers are returning to using debt to fund their purchases. 

This is the fifth time in seven months that the month-over-month rate of growth has been 2.0% or more. However, the historical average month-over-month rate of growth is 3.3%. So, spending growth is still running quite a bit below normal. The annual rate of change remained at 2.0% for the seventh time in eight months. In the next couple of months, the annual rate of change in spending may move a few ticks higher. But, with annual growth in incomes growing slower, it is likely that real consumer spending will see slower growth in 2014.

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; food and beverage processing; forming and fabricating (non-auto); hardware; HVAC; industrial motors, hydraulics and mechanical components; machinery and equipment manufacturing; medical; metalcutting job shops; oil, gas field and mining machinery; power generation; primary metals; and printing.