Consumer Products and Electronics
Consumer Goods Production to Remain Weak
March real disposable income was $12,881 billion dollars (seasonally adjusted at an annual rate), having grown 2.4 percent compared with a year earlier. As usual, this was an all-time high in real disposable income. The rate of growth accelerated for the second month in a row, but it has been below average since February 2016. The annual rate of growth has decelerated steadily since August 2015, and at 2.6 percent in March, it was at its slowest rate since October 2014. Also, this was the ninth month in a row that the annual rate of growth was below 3.1 percent, which is the historical average.
Real consumer spending was $11,695 billion dollars (seasonally adjusted at an annual rate). The month-over-month rate of growth in consumer spending was 2.8 percent, and it has been below the historic average of 3.3 percent since July 2015. The annual rate of growth remained at 2.8 percent, but this annual rate has been between 2.6 or 2.8 percent since April 2016. Given the trend in disposable income, it is likely that consumer spending will continue to be weak.
Generally, consumer goods production has grown at a consistent but moderately slow rate since September 2016, although in March it increased 2.5 percent from one year earlier. That was the second fastest rate of growth since October 2015. I expect continued weak growth in consumer goods production.
Electronics Production Should Grow Faster
Even though disposable income continues to grow at a slower rate (see above), electronics consumer spending is growing faster and faster each month. Compared with one year earlier, March consumer electronics spending increased 16.8 percent, which was noticeably above average. The annual rate of growth has increased at an accelerating rate since February 2016, and in March it was growing at its fastest rate since February 2013.
Annually, electronics/computers/telecommunications production has increased at an accelerating rate since September 2016. Given the rapidly accelerating growth, industrial production seems set to grow even faster as we move into the second and third quarter of 2017.
While there have been seasonal ups and downs, the Gardner Business Index for electronics has improved steadily since December 2015.