Consumer Spending Sees Average Growth for Fourth Month

Real consumer spending in August 2015 was $11,286 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 3.2 percent. Since October 2014, the month-over-month rate of change has been 3.2 percent six of the ten months. This rate of growth is virtually at the historical average. The annual rate of change was unchanged at 3.2 percent. It has been at this level three of the last four months. While the annual rate of change could accelerate some in the next few months as a result of moderately accelerating growth in disposable income, shorter term data in both disposable income and consumer spending indicate that consumer spending is very near its peak rate of growth.

Durable goods spending also hit an all-time high in July. However, its rate of growth was the second slowest since February 2014. The rate of growth in August was virtually the historical average. The annual rate of change slowed to 6.7 percent, which is the slowest rate of growth since January 2015. It does appear that durable goods spending growth has hits its peak rate this cycle. This month durable goods spending was 13.2 percent of all consumer spending, which was an all-time high as well. Durable goods spending continues to represent an ever-increasing portion of consumer spending because of historically and artificially low interest rates.

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.