Income Growth above 4% for Second Month
Other than at the end of 2012 which was artificially inflated due to tax law changes, real disposable income is growing at virtually its fastest rate in eight years.
February real disposable income was $12,278 billion 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 4.0% in February, which was the second month in a row this was the case. Excluding a few months that were artificially inflated due to tax law changes, this was the first time with consecutive months of more than 4.0% growth since October-November 2006. The historical average month-over-month rate of change is 3.1%. February was the third month in a row of above average growth. This pushed the annual rate of growth to 2.8%, which was the fastest rate of growth since January 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.