2. Consumer Economic Trends – March 2016
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Summary
• Recent consumer economic indicators have been decidedly mixed
keeping the Fed on hold
• January disposable income was up 0.5%, but February average weekly
earnings declined 0.1%
• Consumer spending was up 0..5% in January, retail sales declined 0.1%
in February and January’s previously reported gain was revised down
to a decline of 0.4%
• February job gains were strong at 242,000 plus there were upward
revisions to prior months. And the broader employment ratios
continued their positive trends
• Consumers paused their recent run of revolving debt increases which
could explain the dip in retail sales
• February consumer sentiment was essentially unchanged at 91.7 still
well down from the 12 month high of 96.1 in June
• Of some concern is the continued decline in small business optimism
which is now at its lowest level since February ‘14
List of Charts
1. Disposable income
2. Consumer spending
3. Retail sales
4. Ecommerce sales
5. Jobs growth vs. UI claims
6. Employment ratios
7. Wage growth vs. inflation
8. Revolving credit
9. Purchase volume
10. Consumer sentiment
11. Small business optimism
3. Disposable personal income growth gained significantly in January, but still remained tepid
at 4.0% year-over-year
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17.0%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Personal Income and Savings
Disposable Personal Income Y/Y Growth% Personal Savings Rate % Tax Burden % Personal Income (right scale)
Source: Bureau of Economic Analysis
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4. January consumer spending year-over-year growth jumped in January as the decline in
gasoline prices was lapped easing the drag on nondurables spending
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-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'11 '12 '13 '14 '15 '16
Nominal Consumer Spending Growth Y/Y%
Total Consumer
Spending
Durable Goods
Nondurable Goods
Services
Nondurable Goods
ex. Energy
Source: Bureau of Economic Analysis
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5. February retail sales growth disappointed and January’s unexpected gain was revised to a decline.
Gasoline station sales growth dipped but remained on a more positive trajectory due to the lapping of
the decline in gasoline prices
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-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
'11 '12 '13 '14 '15 '16
Retail Sales Growth Y/Y%
Total Retail Sales Excluding Autos Ex. Autos & Gasoline Stations Gasoline Stations (right scale)
Source: Census Bureau
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6. During the last four quarters e-commerce contributed over 55% of retail sales growth…
falling gasoline sales has accelerated e-commerce’s growth impact
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-45%
-30%
-15%
0%
15%
30%
45%
60%
75%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
'07 '08 '09 '10 '11 '12 '13 '14 '15
E-Commerce Sales Growth Y/Y%
Total Retail Sales E-commerce Total ex. E-commerce E-commerce Overall Growth Contribution 4QAverage (right scale)
Source: Census Bureau
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7. February’s jobs gains were better than forecasted, reversing January’s disappointing result.
Initial claims remain historically low… 12 month average job gains at early ‘06 levels
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250
280
310
340
370
400
430
460
490
520
550
580
610
640
670
700-900
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
500
600
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Monthly Employment Gains vs. Unemployment Claims (Thousands)
Monthly Payroll EmploymentGains 4 Week Moving Average UnemploymentClaims (rightscale inverted)
Source: Bureau of Labor Statistics
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8. The broader employment ratios have trended positively for the past several months, a sign
of a strengthening labor market
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1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
57%
58%
59%
60%
61%
62%
63%
64%
65%
66%
67%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Employment Ratios
Labor Force Participation Rate Employment-Population Ratio UnemploymentRate (rightscale)
Source: Bureau of Labor Statistics
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9. Wage growth dipped unexpectedly in February dampening some of enthusiasm of an
otherwise positive jobs report
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-1%
0%
1%
2%
3%
4%
'10 '11 '12 '13 '14 '15 '16
Wage Growth vs. Inflation
Average Hourly Earnings Y/Y Growth CPI Y/Y % Change Core CPI Y/Y % Change
Source: Bureau of Labor Statistics
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10. Revolving credit growth has accelerated since early ‘14; however, as a percentage of
disposable income revolving credit has remain stable at ~2ppt below its pre-recession level
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-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
$800
$825
$850
$875
$900
$925
$950
$975
$1,000
$1,025
$1,050
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Consumer Revolving Credit
Consumer
Revolving
Credit
Outstanding
Consumer
Revolving
CreditY/Y%
Growth (right
scale)
Consumer
Revolving
Creditas a % of
Disposible
Personal
Income (right
scale)
Source: Federal Reserve, Bureau of Economic Analysis
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Billions
12. Consumer sentiment remained essentially unchanged and seems to be unable to gain
much momentum
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-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
40
50
60
70
80
90
100
110
120
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Consumer Sentiment
University of Michigan Consumer Sentiment Y/Y% Change (rightscale)
Source: Bureau of Labor Statistics
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13. Small business optimism declined 1.0ppt from January and is now at its lowest since
February ’14. The index has dropped 7.5ppt from its post recession peak
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80
85
90
95
100
105
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Small Business Optimism
NFIB Small Business Optimism Index 6 Month Moving Average
Source: National Federation of Independent Business
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