Consumer Spending Growth Has Slowed Noticeably

Real consumer spending in February 2016 was $11,378 billion real dollars (seasonally adjusted at an annual rate). As is the case almost every month, this was an all-time high in consumer spending. The month-over-month rate of growth in consumer spending was 2.8 percent. This was the fifth month in a row that the rate of growth was below 3.0 percent, which is below the historic average of 3.3 percent. The annual rate of growth remained at 3.0 percent, which is the slowest rate of annual growth since January 2015. The growth rate has decelerated since July 2015. And, it appears that the growth rate is poised for even slower growth in the upcoming months.

While growing faster than total consumer spending, durable goods spending also has grown at a slower rate recently. In February, durable goods spending grew 5.2 percent compared with one year ago. This was below the historic average growth rate of 5.6 percent. The month-over-month rate of growth in January was the fastest since February 2015. The annual rate of growth, now 5.4 percent, has decelerated since May 2015 and was at its slowest rate of growth since October 2014. Also, the annual rate of growth fell below the historic average in February for the first time since November 2014.

Real consumer spending (or its sub-components such as medical care spending) is an important leading for a number of durable goods end markets: construction materials; custom processors; durable goods; food/beverage processing; forming/fabricating (non-auto); hardware; HVAC; industrial motors/hydraulics/mechanical components; machinery/equipment manufacturing; medical; metalcutting job shops; oil/gas field/mining machinery; power generation; primary metals; and printing.