THE BASIS POINT

Income up, Spending not.

 

Personal Income and Expenses (December 2015)

– Personal Income month/month  +0.3%. Previous was +0.3%
– Consumer Spending month/month +0.0%. Previous was +0.3%
– PCE Price Index month/month  -0.1%. Previous was +0.0%
– Core PCE price index month/month  0.0%. Previous was +0.1%
– PCE Price Index year/year   +0.6%. Previous was +0.4%
– Core PCE price index year/year  1.4%. Previous was +1.4%

Personal Income has been moving up steadily month after month. Personal Income is not only wages and salaries but includes income from investments. The disappointment here is flat Consumer Spending which is another indication of slow GDP growth.

It is difficult to asses why people are not spending more.  Possible reasons are that they are using more of their income to pay debt or that they feel uncertain about the economy and their income in the near future.

 

PMI Manufacturing Index  (January 2016)

– Index level 52.4. Previous was 51.2.

Manufacturing has been a dismal sector and any improvement is a positive.

 

 

ISM Manufacturing Index  (January 2016)

– ISM Manufacturing 48.2. Previous was 48.2

This is a survey index which blends production, new orders, order backlogs, their own inventories, customer inventories, employment, supplier deliveries, exports, imports, and prices.

This is the 4th consecutive month of decline.

 

Construction Spending (December 2015)

– Construction Spending month/month +0.1%. Previous was -0.6%
– Construction Spending year/year +8.2%. Previous was +10.5%.

This had been strong but started slowing last fall.

 

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