Collection of slides depicting U.S. consumer economics trends

1. Consumer Economic Trends
December 2016 Chartbook
Chuck McKay
ckmckay@me.com

2. Consumer Economic Trends – November 2016
12/4/16 Consumer Economics Chartbook - CKMcKay 2
Summary
• The U.S. economy grew a revised 3.2% in 2Q, the strongest gain in two years.
Consumer spending was revised upwards due to e jump in durables. Business
investment remained week overall with an increase in structures offset by a
decline in equipment spending. Uncertainty over the election and world affairs
in general appears to be restraining business investment which could dampen
future growth
• During October disposable income was up 0.6%, but average weekly earnings
declined 0.1% in November
• Consumer spending was up 0.3% in October and retail sales grew 0.8%. The
drag from gasoline station sales was greatly diminished
• November job gains were decent at 178,000; moderating jobs growth has
reduce the twelve month average to 188K from 230 a year ago. The broader
employment ratios have failed to improve during ‘16
• Consumer revolving debt growth has hovered near 6% since March, and the
debt to income ratio remained stable and below 7%
• Post-election consumer sentiment jumped 6.5 points to 93.8. As consumers
anticipate improved personal finances and general economic conditions
• Small business optimism edged up 0.8 in October, but concerns over election
acrimony drove the index’s uncertainty component to a 42 year high
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 increased 0.3 ppt to 4.1% in October. The savings rate
ticked up to 6.0%. For the last several months income growth, taxes and savings have been fairly
stable
12/4/16 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
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. Consumer advanced in October led by a strong jump in durable goods purchases. Also increased
gasoline spending nearly eliminating the two year drag energy has had on overall consumer spending
12/4/16 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
Nominal Consumer Spending Growth Y/Y%
Total Consumer
Spending
Durable Goods
Nondurable Goods
Services
Nondurable Goods
ex. Energy
Source: Bureau of Economic Analysis
Return

5. Retail sales grew 0.8% in October and year-over-year growth increased 4.2%, the highest rate since
Nov. ‘14, as Q4 consumer spending got off to a good start. Gasoline station sales increased 2.2%
during Oct., Y/Y gas station sales were up 0.9% the the first gain since May ‘14
12/4/16 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
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 56% of retail sales growth…
falling gasoline sales has accelerated e-commerce’s growth impact
12/4/16 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 continued at a more moderate pace with 178K reported for November and prior month
revisions a negative 2K. The three month average job gains held steady at 176K. The 12 month
average job gains were 188K, the lowest since February ‘14. Initial claims remain historically low
12/4/16 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
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 dipped to 4.6%, the lowest level since August ‘07. However, the drop was
driven more by a labor force decline than an increase in employment. The broader employment ratios
made little progress as ’16 has been unable to sustain the positive trends seen during ’14 - ’15
12/4/16 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
Employment Ratios
Labor Force Participation Rate Employment-Population Ratio Unemployment Rate (right scale)
Source: Bureau of Labor Statistics
Return

9. Wage growth fell 0.1% in November. Y/Y growth decreased to 2.5%, giving up the gains
seen over the last two months. Y/Y inflation was the highest in two years
12/4/16 Consumer Economics Chartbook - CKMcKay 9
-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
Return

10. The revolving credit growth rate has been stable at ~6% since March. As a percentage of
disposable income, revolving credit has remain stable at ~2ppt below its pre-recession level
12/4/16 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
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. Q3 payment card purchase volume year-over-year growth slid 1.9ppt to 6.0%
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-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 dipped to 93.8 post-election as consumer optimism for their
financial situation and the economy rose on Trump’s victory
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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 (right scale)
Source: University of Michigan
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13. Small business optimism index gained 0.8 in October, but the uncertainty component hit a 42 year
high on election concerns. The trailing six month moving average edged up to 94.4; still below the
index's long run average of 98
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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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