Consumer and small business optimism reached 12-year highs in January as the U.S. economy grew 1.9% in the fourth quarter of 2016. Consumer spending and retail sales increased in December while job gains were strong and unemployment fell. Both consumer sentiment and small business optimism surged due to more optimistic views about the jobs market and economy.

1. Consumer Economic Trends
February 2017 Chartbook
Chuck McKay
ckmckay@me.com

2. Consumer Economic Trends – February 2017
2/6/17 Consumer Economics Chartbook - CKMcKay 2
Summary
• Consumer and small business optimism soared in January with both
indices reaching 12 year highs. The U.S. economy grew a 1.9% in Q4
down from a revised 3.5% gain in 3Q
• During December disposable income was up 0.3%, but average weekly
earnings grew only 0.1% in January ‘17
• Consumer spending was up 0.5% in December and retail sales grew
0.6%. The drag from gasoline station sales has run its course
• January job gains were a strong 227,000 lifting the twelve month
average to 195,000 but below the 217,000 average from a year ago.
The broader employment ratios strengthened in January
• Consumer revolving debt growth rose 0.4ppt to 6.4% in November,
the highest annual growth rate since before the recession
• January consumer sentiment rose to 98.5, on a more optimistic
outlook for jobs and the economy
• Small business optimism index surged 7.4 points to 105.8 in
December. The gain was driven by improved expectations for sales
gains and outlook for business conditions
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. Annual disposable personal income growth fell 0.1ppt to 3.7% in December. The savings rate ticked
down 0.2ppt to 5.4%. For nearly two years annual income growth has hovered slightly below 4%
2/6/17 Consumer Economics Chartbook - CKMcKay 3
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 '17
Personal Income, Savings and Taxes
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. Annual consumer spending growth advanced 3ppt to 4.5% in December led by continued strength in
durable goods purchases and the end of the gasoline spending drag on non-durables spending
2/6/17 Consumer Economics Chartbook - CKMcKay 4
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
'11 '12 '13 '14 '15 '16 '17
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. Retail sales grew 0.6% in December and year-over-year growth increased 0.2ppt to 4.1%, the highest
rate since Nov. ‘14, as gasoline station sales increased 2.0%. Y/Y gas station sales were up 6.4% the
the rate since October ‘12
2/6/17 Consumer Economics Chartbook - CKMcKay 5
-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 '17
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 54% of retail sales growth
2/6/17 Consumer Economics Chartbook - CKMcKay 6
-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 '16
E-Commerce Sales Growth Y/Y%
Note: This chart is updated quarterly
Total Retail Sales E-commerce Total ex. E-commerce E-commerce Overall Growth Contribution 4Q Average (right scale)
Source: Census Bureau
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7. Jobs gains rose to 227K in January. The three month average job gains was up slightly to
183K. Annual average job gains were 195K, up 8K from December
2/6/17 Consumer Economics Chartbook - CKMcKay 7
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 '17
Monthly Employment Gains vs. Unemployment Claims (Thousands)
Monthly Payroll Employment Gains 4 Week Moving Average Unemployment Claims (right scale inverted)
Source: Bureau of Labor Statistics
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8. The unemployment rate ticked to to 4.8% in January driven by an increase in the labor force. Both the
labor participation rate the the employment population ratio increase by 0.2ppt and are at or near their
two year highs
2/6/17 Consumer Economics Chartbook - CKMcKay 8
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 '17
Employment Ratios
Labor Force Participation Rate Employment-Population Ratio Unemployment Rate (right scale)
Source: Bureau of Labor Statistics
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9. Annual wage growth fell 0.3ppt in January, but remained relatively strong at 2.5%. Annual
inflation rose above 2% for the first time since May ‘14
2/6/17 Consumer Economics Chartbook - CKMcKay 9
-1%
0%
1%
2%
3%
4%
'10 '11 '12 '13 '14 '15 '16 '17
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. The annual revolving credit growth rate climbed 0.4ppt to 6.4% in November. As a percentage of
disposable income, revolving credit growth edged up to 7.0%; still ~2ppt below its pre-recession level
2/6/17 Consumer Economics Chartbook - CKMcKay 10
-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 '17
Consumer Revolving Credit
Consumer
Revolving
Credit
Outstanding
Consumer
Revolving
Credit Y/Y%
Growth (right
scale)
Consumer
Revolving
Credit as a % of
Disposible
Personal
Income (right
scale)
Source: Federal Reserve, Bureau of Economic Analysis
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Billions

11. Q4 payment card purchase volume year-over-year growth ticked up 0.5ppt to 6.6%
2/6/17 Consumer Economics Chartbook - CKMcKay 11
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
'08 '09 '10 '11 '12 '13 '14 '15 '16
Network Payment Card Purchase Volume Growth Y/Y%
Source: AXP, DFS, MA, V Company Reports
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12. The Consumer Sentiment index rose to 98.5 in January. The highest level in 12 years on a
more optimistic outlook for jobs and the economy
2/6/17 Consumer Economics Chartbook - CKMcKay 12
-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 '17
Consumer Sentiment
University of Michigan Consumer Sentiment Y/Y% Change (right scale)
Source: University of Michigan
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13. Small business optimism index surged 7.4 points to 105.8 in December. The index is now at its
highest level since 2004. The gain was driven by improved expectations for sales gains and outlook
for business conditions
2/6/17 Consumer Economics Chartbook - CKMcKay 13
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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