Consumer Goods and Automotive
Consumer Goods Spending on a Tear
Consumer goods production has seen decelerating growth since last September. However, despite the recent downtrend in the annual rate of change (see the gray line on the chart), its growth rate is still on the same uptrend it has been on for the last four years, and given recent data on disposable income and consumer goods spending, I think consumer goods production should continue on this path.
In February, real disposable income was $12,278 billion (seasonally adjusted at an annual rate). This was the highest level of disposable income ever. In addition, the month-over-month rate of growth in the month was 4 percent for the second month in a row. Excluding a few months that were artificially inflated due to changes in tax law, this was the first occurrence of growth of at least 4 percent in consecutive months since October and November 2006. The historical average month-over-month rate of change is 3.1 percent. February was the third month in a row of above-average growth, which pushed the annual rate of growth to 2.8 percent, the fastest rate of growth since January 2013. We should see further acceleration in the annual rate of change over the next few months.
In response to the accelerating growth in disposable income since early 2014, consumer goods spending has taken off in early 2015. The annual rate of change in such spending is growing at its fastest rate since September 2011, and given the accelerating growth in incomes, consumer goods spending should continue to grow faster, at least into the summer. This is very positive for consumer goods production and mold consumption.