US Consumers: Still Happily Shopping
Once again, the whole world depends on US consumers. They haven’t let us down so far. Over the past three months through May, the three-month average of real personal consumption expenditures is up 2.9% (saar), the best such growth rate since last September. The gain was led by durable goods (8.1%) and nondurable goods (4.9), while services (1.5) lagged.
However, the growth rate of real wages and salaries on a comparable basis slowed to 2.4%, the lowest in a year. That reflected the weaker pace of payroll employment gains in recent months. Shoppers reduced their personal savings rate to keep doing what they do best. It fell from a recent peak of 6.0% in March to 5.3% in May. Despite the recent weakness in payroll gains, consumers remain relatively optimistic.
Consider the following:
(1) The Consumer Confidence Index (CCI) climbed to 98.0 in June. It has been hovering around its cyclical high of 103.8 reached during January 2015 for nearly two years. Interestingly, the CCI for people under 35 years old jumped to 132.1, the highest since October 2000. On the other hand, it fell for those who are 55 or older to 73.3, the lowest since September 2014. Younger people probably have a higher propensity to spend than older ones, but also tend to have less income.
(2) In any event, the present situation component of the Consumer Optimism Index — which Debbie and I calculate by averaging the Consumer Confidence Index and the Consumer Sentiment Index — rose to 114.6 in June, the highest reading since July 2007.
Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research. To read more of his blogs,
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