Economic Data Roundup (03/29/2018)

3/29/18 12:00 PM

iStock-545573832There were a few important reports on the U.S. economy worth mentioning this morning. First, data from the Department of Commerce showed that personal income for Americans rose by 0.4 percent in February, in line with expectations and the 8th monthly increase in a row. During this same period consumer spending, which accounts for more than two-thirds of the economy (GDP), lifted by 0.2 percent. That is the second consecutive month that consumption has lagged income growth, suggesting that households continue to repair their balance sheets after the late-2017 surge in spending. Moreover, Americans’ personal saving rate lifted to 3.4 percent last month, the highest reading since August, and revolving credit (credit card) growth has slowed. As for inflation, the core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of consumer price changes, rose by 0.2 percent in February, and 1.6 percent during the past twelve months. The latter is up from the January reading but still well below FOMC members’ 2.0 percent “target.”

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Elsewhere, the University of Michigan’s consumer sentiment index increased to 101.4 in March, down slightly from the mid-month estimate but still the highest headline reading since 2004. That somewhat agrees with the latest reading on The Conference Board’s consumer confidence index, also released this week, which ended March at 127.7. That is worse than forecast but still a modest pullback from the 18-year high hit in February. Continued volatility in the market appears to have weighed the most on confidence in March, as the percentage of surveyed Americans who said that they expect stock prices to be higher twelve months from now fell to the lowest level in more than a year. However, consumers have often been a contrarian indicator when it comes to predicting performance in the stock market over such a short time horizon. More importantly, Lynn Franco, Director of Economic Indicators at The Conference Board, stressed that “despite the modest retreat in confidence, index levels remain historically high and suggest further strong growth in the months ahead.”

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Sources: Econoday, U.S. DoC, Bloomberg, ZH, UoM, The Conference Board

Post author: Charles Couch