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.