Spending Improving but Income Still Flat
In June, real consumer durable goods spending increased 7.8% compared to one year ago. This was the 9th straight month that monthly spending increased compared to one year ago (although the rate of growth has slowed each of the last three months). Since its bottom in December 2008, real consumer durable goods spending is up 10.6%. While there has been a decent rebound in durable goods spending (although it could be related to the home-buyer tax credit), there has not been as much of a rebound in real personal income excluding government transfers. In June, this measure of income was 0.26% higher than last June, which is the first time that has happened since June 2008. Incomes are up just 1.4% from their bottom in October of 2009. As I have repeatedly said, spending improving more and prior to incomes is out of whack from the normal economic cycle and is not sustainable in the long run. For more information go here.