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By New_Deal_democrat June 25, 2015 12:28 pm
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Personal income, spending, and saving: a trifecta of good news for the US economy
This morning's report on personal income, savings, and spending completes the picture of the consumer coming back after a brief hibernation. And consumers aren't spending all of their gas savings, they have simply returned to normal.

To the graphs!  First, here is a comparison of real retail sales through May (blue) vs. real personal consumption expenditures (red):

While real retail sales did have a winter dip, they are back on trend at a new high.  But retail sales only cover about half of all purposes. Personal consumption expenditures are more comprehensive, and they have stayed on trend with only a slight pause during last winter.

Since consumer spending is a bout 70% of all spending, the improvement here is more than enough to offset the slight downturn in industrial production since last November.

Next, here is the personal savings rate:

This has returned to its top end of typical range for the last 2+!years, even with the increase in spending. So consumers are still keeping a share of their gas savings.

I'd be remiss if I didn't mention the Atlanta Fed's GDPNow calculator, which, as the name implies, is a day by day "now-cast" of the present quarter's GDP, baed on information available to date.  This did a great job anticipating the roughly 0 1st quarter GDP, and was cited by a few Doomers as proof that we were about to enter, if not in, a recession.  Well, here's how it stands now:

 
 
At 2.1%, this isn't great, but it is far from recession -- and of course will change again over the next month.
 
Finally, here is real retail sales per capita, which in the past has reliably turned south a year or more before past recessions:
 
 
Now if we can get some relief on the overly strong US$, industrial production may turn around too.
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