Main takeaways:
  • Slowdown in consumption in September mirrors the slowdown earlier this year, since it is all due to energy:
    • Consumption of energy goods and services dropped 5.3% (not annualized) in the month.
    • Excluding energy, consumption rose 0.4% in the month.
  • Consumption and income seem to have weathered well the tightening of financial conditions.
  • Nominal (real) disposable income trend growth in the last 12 months growing at 3.3% (2.9%) and consumption trend growth at 3.6% (3.0%).
  • Core nominal (real) consumption (ex food and energy) growing at 4.5% (3.3%) in the last 12 months.
Personal spending and household income both rose 0.1% in September. Savings rate almost flat at close to 5% (the average observed since 2013).

Disposable income seems to be in a steady trend, while household consumption rebounded from the lows early in the year and is back to its previous trend growth.

Chart 1a) Income and expenditures, nominal, since 2010

The growth trend in the last 12 months for disposable income remained at 3.3% in September (3.2% in July and 3.1% in June), while the growth trend for consumption moved up to 3.6% from 3.4% in August (2.8% in July and 2.6% in June).

Cart 1b) Income and expenditures, nominal, last 2 years

Chart 2a) Income and expenditures, volume, since 2010

When looking at volumes (constant prices) the trend growth in real disposable income slowed to 2.9% in September (from 3.0% in August and 3.2% in July), while real consumption rose remained stable at 3% (2.8% in July).

Chart 2b) Income and expenditures, volume, last 2 years

The chart below shows slightly different measures of income. The green line shows private sector wages have clearly slowed down in recent months (from above average growth) and are now more aligned with the broader concept of disposable income. Overall, all measures are growing at close to 4% in the last 6 months.

Chart 3a) Different measures / concepts of household income, since 2010

Chart 3b) Different measures / concepts of household income, last 2 years

The chart below shows that almost all the recent stagnation in consumption was due to 'energy' consumption.

Chart 4a) Household consumption, core vs total, nominal, since 2010

Chart 4b) Household consumption, core vs total, nominal, last 2 years

Chart 4c) Household consumption, core vs total, volumes, since 2010


Chart 4d) Household consumption, core vs total, volumes, last 2 years

Breaking household consumption into goods and services show that the recent soft patch was entirely due to goods consumption -- but take a look in the chart of volumes: it shows goods consumption growing even faster than its recent growth trend.

Chart 5a) Goods and services consumption, nominal, since 2010

Chart 5b) Goods and services consumption, volume, since 2010

Digging further into goods consumption it is evident that most of the hit happened in nondurable (which includes gasoline), but when adjusting for prices nondurable goods seem to be back to the previous growth trend.

Chart 6a) Goods consumption (durables and nondurables), nominal, since 2010

Chart 6b) Goods consumption (durables and nondurables), volume, since 2010

Chart below focus only on nondurable goods (volume) to better spot the trends.

Chart 6c) Goods consumption (nondurables), volume, since 2010