The Wall Street Journal doubled today with the thought that consumer spending is high:
USA. households increase their expenditures in July, provide assurance that economic expansion continues to grow over the decade, despite slowdowns in factory activity and global growth. Personal consumption expenditure, a measure of household spending, increased the seasonally adjusted 0.6% in July from June, a pickup from the previous two months, the Ministry of Commerce announced on Friday, continuing stable results from major emerging economies strength.
First, this is not adjusted for inflation, although real numbers are released at the same time as nominal numbers. Second, look at the monthly growth in consumer spending over the last few decades:
It's all noise. There is no way to extract useful information from this. If you compare growth over the year instead – which makes more sense in the first place – you get this:
There is still some noise, but there is also a clear signal: Consumer spending is rising in July with rates around June and May and April and March. In fact, this is slightly below the average over the last few years.
It should be noted that this works in both directions. If you look at personal income, it did not increase at all between June and July. It was completely flat. Bad news! But if you look at the year-over-year growth, things look a little different:
Income growth has shown some declaration over the last year, but it's still pretty positive.
I know these things seem pretty annoying. , but it does matter if you really want to know the state of the economy. The summary of the Journal of July is that consumer spending has been strong, but revenue growth has been weak. In fact, both were relatively average.