January 2013 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis (BEA) data showed that personal income decreased $505.5 billion (3.6 percent) and disposable personal income (DPI) decreased $491.4 billion (4.0 percent) in January. Personal consumption expenditures (PCE) increased $18.2 billion (0.2 percent). Real (inflation-adjusted) DPI decreased 4.0 percent while real PCE increased 0.1 percent. 

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The BEA indicated that the January drop in DPI “mainly reflected the effect of special factors, which boosted employee contributions for government social insurance in January and which had boosted wages and salaries and personal dividends in December.  Excluding these special factors and others…DPI increased $37.6 billion, or 0.3 percent in January, after increasing $38.6 billion, or 0.3 percent, in December.” What the foregoing means in plain English is that those who could do so moved the timing of compensation (e.g., bonuses) forward in time to beat the imposition of new taxes that began with the new year. 

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The beginning-of-the-year tax hike apparently restrained consumer spending as well. The Census Bureau reported that consumers increased retail spending by a meager 0.1 percent (seasonally adjusted) during January as higher sales at general merchandise stores overcame the drag from other retailers. The increase can be attributed to seasonal adjustments, however, since -- on an unadjusted basis -- sales fell 18.4 percent between December and January, led (ironically) by general merchandise stores.

“Normally people reduce their savings when their tax rates go up,” said Steve Rick, senior economist at Credit Union National Association in Wisconsin. “It looks like consumers did drop their spending a bit. It may be signs of stress on lower and middle-income people. They don’t have much savings to begin with.” Another indicator suggesting consumers are stressed is Coupons.com’s Internet Coupon Index, which follows how frequently people view and print coupons and their redemption rate. “The index tends to run in a range,” Coupons.com CEO Steven Boal said. “In September, October and November 2007, it popped out of its range for the first time… And, for the first time since then, we are seeing a tripping out of the range.”

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Although January’s retail sales remained near their all-time high in nominal terms, adjusting the data to account for inflation and population growth shows that sales have yet to recover their November 2007 high; moreover, sales are only 1.4 percent above their January 2000 level. 

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Total consumer debt outstanding (CDO) rose by a seasonally adjusted $16.2 billion (+7.0 percent annualized) in January. Revolving (mostly credit card) debt increased by $0.1 billion (+0.1 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $16.0 billion (+10.0 percent annualized)  the fifth-largest U.S. government consumer credit injection in history. Federal student loans comprised almost 89 percent of January’s increase in non-revolving debt. 

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In the past 12 months, of the $153 billion in total consumer credit increase, just $6.4 billion was in revolving credit. The balance: student and car loans.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

December 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis (BEA) data showed that personal income increased $352.4 billion (2.6 percent) and disposable personal income (DPI) increased $331.3 billion (2.7 percent) in December. Personal consumption expenditures (PCE) increased $22.6 billion (0.2 percent). Real (inflation-adjusted) DPI increased 2.8 percent while real PCE increased 0.2 percent. 

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The BEA indicated that the jump in personal income during November and December “was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments.” Excluding those special factors, DPI increased by a much more modest $44.1 billion (0.4 percent) in December following an increase of $66.5 billion (0.6 percent) in November.

In other words, as Zerohedge.com put it, “it was all a forward pull in comp in December to avoid the tax hikes from the January 1 Fiscal Cliff. Sure enough, of the $352 billion increase in personal income, some $268 billion, or 76% was due to Personal Dividend Income which exploded by some 34.3% to $1.05 trillion as companies ‘dividended’ income like crazy to avoid what they expected would be a huge increase in the dividend income tax.” 

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The Census Bureau reported that consumers increased retail spending by 0.5 percent (seasonally adjusted) during December as higher auto sales overcame the drag from gas stations. On an unadjusted basis, sales rose 12.7 percent between November and December, led by general merchandise stores. 

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Total consumer debt outstanding (CDO) rose by a seasonally adjusted $14.595 billion (6.3 percent annualized) in December. Revolving (mostly credit card) debt decreased by $3.6 billion (-5.1 percent annualized), while non-revolving debt (mainly student and auto loans) increased by a record $18.2 billion (11.4 percent annualized). Federal student loans comprised approximately half of December’s increase in non-revolving debt. 

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Total CDO jumped by $150.8 billion (5.7 percent) during 2012, of which $148.3 billion (98 percent) was comprised of non-revolving loans; federal student loans increased by $109.4 billion (nearly three-quarters of the total CDO increase).

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

November 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $85.8 billion (0.6 percent) and disposable personal income (DPI) rose $74.7 billion (0.6 percent) in November. Personal consumption expenditures (PCE) advanced $41.3 billion (0.4 percent). Real (inflation-adjusted) DPI increased 0.8 percent while real PCE increased 0.6 percent.

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Although aggregate personal income continues to set new highs on a nominal basis, in inflation-adjusted terms it only finally exceeded the previous peak in November. Taking population growth into account makes the picture even gloomier; per-capita real personal income has recouped less than two-thirds of the prior peak-to-trough loss. It remains to be seen whether November’s jump upward can be sustained or trends lower in the fashion of 2011.

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The Census Bureau reported that consumers increased retail spending during November by 0.3 percent (seasonally adjusted); greater auto sales and online purchases overcame the drag from gas stations. On an unadjusted basis, sales rose 2.5 percent between October and November, led by general merchandise stores.

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Total consumer debt outstanding rose by a seasonally adjusted $16.045 billion (7.0 percent annualized) in November. Revolving (mostly credit card) debt increased by $0.8 billion (1.1 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $15.2 billion (9.6 percent annualized). Federal student loans comprised nearly two-thirds of the increase in non-revolving debt, and over one-quarter of the increase in total debt outstanding.

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

October 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $0.4 billion (less than 0.1 percent) and disposable personal income (DPI) increased $0.8 billion (less than 0.1 percent) in October. Concurrently, personal consumption expenditures (PCE) decreased $20.2 billion (0.2 percent). Real (inflation-adjusted) DPI decreased 0.1 percent while real PCE decreased 0.3 percent.
 

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Although aggregate personal income continues to set new highs on a nominal basis, in inflation-adjusted terms it is still slightly below the May 2008 peak -- and declining slowly. Taking population growth into account makes the picture even gloomier; per-capita real personal income has recouped only about 54percent of the prior peak-to-trough loss. Moreover, it appears real income metrics have rolled over and are declining again. The purchasing power consumers “feel” with their pocketbooks is most closely related to the per-capita RPI line.
 

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Household wealth increased by nearly $1.8 trillion in 3Q2012 -- a jump of 8.6 percent during the past year -- but remains nearly 4 percent below the 3Q2007 peak. Taking price inflation into account, household wealth is 14 percent below the peak.
 

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The Census Bureau reported that consumers decreased spending on retail goods during October (by 0.3 percent, seasonally adjusted). On an unadjusted basis, sales rose 3.5 percent between September and October.
 

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Total consumer debt outstanding rose by a seasonally adjusted $14.2 billion (6.2 percent annualized) in October. Revolving (mostly credit card) debt increased by $3.4 billion (4.7 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $10.8 billion (6.9 percent annualized). Federal student loans comprised more than three-fourths of the increase in non-revolving debt, and over two-thirds of the increase in total debt outstanding.
 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

September 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $48.1 billion (0.4 percent) and disposable personal income (DPI) increased $43.0 billion (0.4 percent) in September. Concurrently, personal consumption expenditures (PCE) increased $87.9 billion (0.8 percent). Real (inflation-adjusted) DPI decreased less than 0.1 percent while real PCE increased 0.4 percent.
 

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Although aggregate personal income continues to set new highs on a nominal basis, in inflation-adjusted terms it is just on par with the May 2008 peak. Taking population growth into account makes the picture even gloomier; per-capita real personal income has recouped less than 60 percent of the prior peak-to-trough loss. Moreover, it appears real income metrics have stalled and may be rolling over again. The purchasing power consumers “feel” with their pocketbooks is most closely related to the per-capita RPI line.
 

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The Census Bureau reported that consumers increased spending on retail goods during September (by 1.1 percent, seasonally adjusted). Americans bought everything from back-to-school supplies to new autos to the latest version of the iPhone. Sales ostensibly advanced in every retail segment except department stores. We say “ostensibly” because seasonal adjustments appear to be entirely responsible for the uptick in sales. On an unadjusted basis, sales declined in every kind of business between August and September.
 

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Total consumer debt outstanding rose by a seasonally adjusted $11.4 billion (5.0 percent annualized) in September. Revolving (mostly credit card) debt increased by $2.9 billion (4.1 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $14.3 billion (9.2 percent annualized). Federal student loans comprised more than two-thirds of the increase in non-revolving debt.
 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

August 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $15.0 billion (0.1 percent), and disposable personal income (DPI) increased $12.5 billion (0.1 percent) in August. Personal consumption expenditures (PCE) increased $57.2 billion (0.5 percent). Real (inflation-adjusted) DPI decreased 0.3 percent while real PCE increased 0.1 percent.
 

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The Census Bureau reported that consumers increased spending on retail goods during August (0.9 percent, seasonally adjusted). Excluding auto and gasoline sales, however, retail spending among other categories either declined or saw little gain.
 

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Total consumer debt outstanding jumped by a seasonally adjusted $18.1 billion (8.0 percent annualized). Revolving (mostly credit card) debt increased by $4.2 billion (5.9 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $13.9 billion (9.0 percent annualized). In August federal student loans comprised more than three-quarters of the increase in non-revolving debt.
 

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The most prominent feature of the last two charts is the December 2010 spike. The Federal Reserve in September revised data from December 2010 onward, but not prior data. That discontinuity in the series has created a firestorm of criticism.

July 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $42.3 billion (0.3 percent), and disposable personal income (DPI) increased $39.9 billion (0.3 percent) in July. Personal consumption expenditures (PCE) increased $46.0 billion (0.4 percent). Real (inflation-adjusted) DPI increased 0.3 percent while real PCE increased 0.4 percent.
 

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The Census Bureau reported that consumers increased spending on retail goods during July (0.8 percent, seasonally adjusted). Interestingly, retail sales were up by an identical percentage across all categories. Excluding gasoline sales, retail spending also rose 0.8 percent from June to July.
 

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Total consumer debt outstanding fell by a seasonally adjusted $3.3 billion (1.5 percent annualized). Revolving (mostly credit card) debt decreased by $4.8 billion (6.8 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $1.5 billion (1.0 percent annualized). For a change, in July federal student loans comprised less than one-third of the increase in non-revolving debt.
 

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The most prominent feature of the last two charts is the December 2010 spike. The Federal Reserve revised data from that month onward, but not prior data. That discontinuity in the series has created a firestorm of criticism.

June 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $61.8 billion (0.5 percent), and disposable personal income (DPI) increased $52.4 billion (0.4 percent) in June. Personal consumption expenditures (PCE) decreased $1.3 billion (less than 0.1 percent). Real (inflation-adjusted) DPI increased 0.3 percent while real PCE decreased 0.1 percent.
 

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Consumers decreased spending on retail goods for the third month in a row during June (0.5 percent, seasonally adjusted), the first time that has happened since autumn 2008. Excluding sales at gas stations, retail spending fell 0.3 percent from May to June.
 

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Total consumer debt outstanding rose by a seasonally adjusted $6.5 billion (3.0 percent annualized). Revolving (mostly credit card) debt decreased by $3.7 billion (5.1 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $10.2 billion (7.2 percent annualized). In June, federal student loans comprised nearly 92 percent of the increase in non-revolving debt.
 

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May 2012 Personal Income and Outlays, Retail Sales and Consumer Debt

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Bureau of Economic Analysis data showed that personal income increased $25.4 billion (0.2 percent), and disposable personal income (DPI) increased $18.5 billion (0.2 percent) in May. Personal consumption expenditures (PCE) decreased $4.7 billion, or less than 0.1 percent. Real (inflation-adjusted) DPI increased 0.3 percent while real PCE increased 0.1 percent.
 

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Consumers decreased spending on retail goods for the second month in a row during May (0.2 percent, seasonally adjusted), the first time that has happened in two years. If gas purchases are omitted, however, retail spending actually rose 0.1 percent. Sales at gas stations slumped 2.2 percent in May, the biggest retreat since December.

Auto sales rose 0.8 percent (seasonally adjusted). The increase was somewhat of a surprise since industry figures showed that total vehicle sales fell in May from April -- to a 13.7 million annual rate from 14.4 million. Excluding car sales, retail sales fell 0.4 percent.
 

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Total consumer debt outstanding jumped by a seasonally adjusted $17.1 billion (8.0 percent annualized). Revolving (mostly credit card) debt increased by $8.0 billion (11.2 percent annualized), while non-revolving debt (mainly student and auto loans) increased by $9.1 billion (6.5 percent annualized). In May, student loans comprised nearly two-thirds of the increase in non-revolving debt.
 

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