Growth continues at stable pace

Monthly figures for personal income show stable growth.  Looking at recent history, recall that the Microsoft dividend (December 2004) caused income to spike up.  The 12-month comparison the following December looked abnormally low.  And then Hurricane Katrina showed up as a major loss.  Abstracting from all of that, the growth trend is stable:

Consumer spending, after an inflation adjustment, was at a sustainable three percent pace, down from last year’s unsustainable growth:


The inflation measures that come packaged with this data, which the Fed prefers over CPI, show no worsening.

Business strategy implications:  Consumer have income growth, but they are declining to grow their spending as fast as they did last year.  Add to that a small shift away from non-energy spending due to budget constraints, and most consumer-oriented businesses cannot count on sales growing as fast this year as they did last year.