Main takeaways:
  • No sign of a slowdown on either income or spending in August - despite the tightening of financial conditions and drop in consumer confidence. However, it might be too early to gauge the full effect of financial conditions on economic activity.
  • Household consumption was up 0.4% in June and income rose 0.3%.
  • Nominal (real) disposable income trend growth in the last 12 months growing at 3.3% (3.0%) and consumption trend growth at 3.4% (3.0%).
  • Core nominal (real) consumption (ex food and energy) growing at 4.4% (3.3%) in the last 12 months.

Personal spending rose 0.4 in August and household income rose 0.3% in the month.

The charts below shows that consumption has catch up and seem to be back to its previous trend before the slowdown in the first quarter. Savings rate remained moved down a bit to 4.7% (from 4.8%) in the month (the average rate observed since 2013 is 5%).


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 2007

The growth trend in the last 12 months for disposable income went up to 3.3% in August from 3.2% in July and 3.1% in June, while the growth trend for consumption moved up to 3.4% from 2.8% and 2.6%, respectively.

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

Chart 2a) Income and expenditures, volume, since 2007

When looking at volumes (constant prices) the trend growth in real disposable income slowed to 3.% in the last two years (from 3.2%), while real consumption rose 3% (from 2.8%).

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.

Chart 3a) Different measures / concepts of household income, since 2007

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 2007

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

Chart 4c) Household consumption, core vs total, volumes, since 2007


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 2007

Chart 5b) Goods and services consumption, volume, since 2007

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 2007

Chart 6b) Goods consumption (durables and nondurables), volume, since 2007

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

Chart 6c) Goods consumption (nondurables), volume, since 2007