Consumer Earnings, Savings and Spending

Consumer Spending for January comes negative and below expectations

Since retail sales were weak, this is not as unexpected, and it could have the exact same explanations like weather-related weakness and a strong holiday season, and also annual trends still looking solid. However, weak PCE will weigh on GDP more than only retail sales, and it adds to a series of economic data that have been coming weak and lower than expected since January, so it is something we should start to consider more now.

  • Personal Income 0.9%, Exp. 0.4%. At 4.4% y/y
  • Personal Spending -0.2%, Exp. +0.2%. Still 5.6% y/y
  • The savings rate surges from 3.5% to 4.6%

Real personal spending fell by the most since 2021 at -0.5 m/m, but still at 3.0% y/y


Durable Goods the biggest Drag, particularly related to Autos



Consumer Spending Rebounded in February after the weak January, however, most of the increase is attributed to price increases and no volume.

  • Personal Income 0.9%, vs. +0.4% est. & +0.7% prior. At 4.4% y/y
  • Personal Spending 0.4%, vs. +0.5% est. & -0.3% prior. Still 5.3% y/y vs 5.4% y/y prior
  • The savings rate surges from 4.3% to 4.6%. → Interesting trends, its common to see saving rates increasing in times of uncertainty, and if sustained could lead to lower spending
Charts

Inflation was primarily the force of the increase, without it, consumer spending was almost flat at 0.1% m/m vs 0.3% expected (vs -0.6 last month), and still 2.7% y/y.
For now, it seems will be a flat to negative quarter for consumer spending, which will flow to GDP.

Charts

Goods Spending currently growing the most, most likely there could be pull pull-forward effect due to tariffs. Services are weaker.

  • Durable goods increased 1% m/m, and nondurable goods 0.6% m/m
  • Services increased 0.2% m/m.
Charts