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Personal income grew by $48.1 billion in September, 0.4%, its fastest pace since March. Despite the strong income growth consumption personal consumption growth outpaced income, leading the savings rate to fall to its lowest level in ten months.



Personal income growth accelerated in September, led by dividend, rental and proprietor income. Wage income improved in September, rising 0.3%, however remains modest consistent with the weak labor market.

Real spending accelerated to 0.4% in september, however nominal spending jumped 0.8% over the month, the fastest growth since February. Spending growth was led by goods, both durable and non-durable.

Nominal spending outpacing income led the savings rate to drop to 3.3%, its lowest level on ten months. The savings rate has now fallen 1% since June.

Read the BEA release.

Led by strong private sector gains, construction spending rose 0.8% in October according to a Census Bureau report released this morning. The growth is stronger than September’s weak 0.2% but remains at relatively low levels.


Private construction led the gain, growing by 2.3%, its fastest rate since May. Private residential construction was the primary contributor to the growth, up 3.4% from September. Non-residential growth was strong as well, growing 1.3%. Public construction spending proved a drag on growth falling 1.8%.

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Retail sales reversed the previous month’s loss in November, rising 0.3%. Auto dealers were primarily responsible for the gain, as core sales (excluding autos and gasoline) rose by just 0.7%. Despite the modest overall rise there were big moves within individual segments. Year-over-year growth held steady at 3.7% in November.



Non-store retailers saw strong gains in November rising 3% over the previous month, about three times their recent average. The strong growth contributed 0.3% to overall growth. Electronics and appliances stores also saw strong growth, rising 2.5%. Rebuilding from Hurricane Sandy likely contributed to the strong 1.6% growth in sales at building materials stores.

Sales fell the most sharply at Gasoline stations, falling 4.0% over the month. The decline in gasoline sales was likely a direct result of lower gasoline prices. Sales also fell unusually sharply at general stores, which were down 0.9%.

Read the Census report.

Industrial production rose by a strong 0.7% in October according to a Federal Reserve report released this morning. The growth follows a downward revision of September’s growth to -0.1% from 0.2%. October’s growth is well above the growth seen in recent months, excluding a 1.2% jump seen in July.

Manufacturing output rose by a solid 0.5% in October due primarily to a 3.1% growth in motor vehicle production. Excluding the auto sector manufacturing rose 0.3%, matching September’s growth.


A 2.3% increase in mining output contributed to overall industrial production growth in October. This follows a contraction of 0.5% in September. Utilities posted a 0.1% decline in October, not nearly as bad as the 2.0% decline reported in September.

Looking forward the solid increases in final sales and slower rate of inventory accumulation over the last quarter imply that manufacturing will remain strong through the rest of the year.

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A recent study released by Moody’s Analytics shows that card usage in the U.S. increased GDP by 0.3% over the past five years, adding $127 billion to the economy.

The study looked at 56 countries, together representing 93% of global GDP and found that payment cards added $983 billion to global GDP over the same five-year window. The average global growth for the five years was 1.8% per year, which would have fallen to 1.6% without card usage.

Moody’s noted that “Card usage makes the economy more efficient, yielding a meaningful boost to economic growth, year after year, through a multitude of factors including transaction efficiencies, consumer access to credit and consumer confidence in the payment system overall."

Card usage contributes to economic activity by reducing transaction costs and improving efficiency in the flow of goods and services. Cards allow consumers immediate secure access to all of their funds and credit lines allowing them to optimize consumption decisions. The cards also aid merchants by reducing cash and check handling and the risks associated with holding cash.

Read the full white paper and fact sheet.

The second estimate of third quarter GDP indicates that the economy expanded at 2.0% during the quarter, down from an initial estimate of 2.5%, according to a Bureau of Economic Analysis report released this morning. Over the past year the economy has expanded just 1.5%, well below levels needed for a self sustaining recovery.


The second estimate of third quarter growth was 0.5%, or $15 billion, lower than the initial estimate. The decline is due primarily to a large downward revision to private inventory investment and smaller downward revisions to nonresidential fixed investment and personal consumption expenditures. These drags on GDP were partially offset by a downward revision to imports.

Despite the downward revision, third quarter GDP showed improvement from the second quarter’s 1.3% growth. The acceleration in growth reflects stronger growth in consumer spending, business investment, and exports as well as a smaller drag from state and local government. A large drop in inventory investment was the primary drag on growth in the third quarter.

Corporate profits rose at 2.1% (not annualized) in the third quarter, slower than the 3.3% growth seen in the second quarter. Despite the slower rise, profits are up almost 8% over the previous year.


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Personal income growth outpaced consumption growth in November, rising 0.6% and leading the savings rate to tick up slightly. Novembers growth was the fastest rate since February. Hurricane Sandy played a role in Novembers strength, as it depressed growth in October, leading to a rebound in November.



The improvement in personal income was welcome, as growth has averaged just 0.2% over the past 7 months. Real personal income preformed better than nominal rising 0.8% due to a falling PCE index. Wage income rose 0.6% in November as well, recovering from a 0.3% drop the previous month.

Consumption recovered in November, rising 0.4% over the month after falling in October. Consumption gains were led by durable goods purchases, which rose 2.7% over the month. Some of this strength is due to auto sales delayed by Sandy. Non-durable goods purchases fell for the second consecutive month in November, losing 1.0%.

Consumer prices, as measured by the PCE deflator, fell 0.2% in November, their first decline since May. Much of the decline was due to energy prices falling 4.4%. Core prices remained unchanged.

With income growth outpacing spending growth, the savings rate rose 0.2 points to 3.6%. November is the second month the savings rate has improved, putting it on par with Augusts level.

Read the BEA report.

Retail sales declined 0.5% in June, the third consecutive monthly decline. Excluding autos, sales fell 0.4% as declines were broad-based in June. Revisions to growth in May were minor, but April sales were revised lower to -0.5% from the previously revised -0.2% reported last month.

Falling gasoline prices played a part in June’s decline as gasoline stations sales led the fall. Building supply stores and sporting goods and hobby stores also experienced larger declines.

The only bright spot to the report was nonstore retailers, but their sales were small and also lagged recent trends.

While retail sales remain above year-ago levels, the growth slowed to 3.8%, the first time growth has been below 4% since August 2010.

Read the report.