In the latest quarter, real consumption in the United States grew at a robust 3.7% annual rate. Goods consumption surged at an impressive 6%, while services maintained a solid 3.2% growth rate (Figure 1). These numbers suggest resiliant consumption, growing above trend. (Figure 2).
Despite this, the The University of Michigan’s Consumer Sentiment Index for US consumer sentiment has remained lower than one might expect, given the robust consumption figures we have seen.
Figure 3 sheds some light on this. Once you peel away income from assets, rentals and government programmes, real wages and salaries (according to the PCE report) are markedly below their post-GFC trend.
This subset of employment income (which doesn't include supplements to income like bonuses), gives a clearer view of the median consumer in the US that shows up in surveys like Michigan's Consumer Sentiment survey.
With election day nearing, many voters remain frustrated with the economy.
Comments