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Consumers Are Spending More, Faster

J: The late Willam Safire was a brilliant wordsmith who served as a speechwriter during the Nixon Administration (1969-1974). In a speech he wrote that was delivered by then-Vice President Spiro T. Agnew to the California Republican State Convention on September 11, 1970, he introduced the phrase "nattering nabobs of negativism" to describe the media at that time. (L: Jim loves this phrase, and I have to admit the fancy words and alliteration are pretty cool.)

J: The same crowd, albeit mostly with new players, is still at it. (L: Jim is going to be talking about how the tax cuts did NOT end up as "negative" as Democrats were predicting.) In response to the tax cut, House Minority Leader Nancy Pelosi said to reporters on January 11, "In terms of the bonus that they are giving to workers to kind of put the schmooze on is so pathetic. It's so pathetic. (L: I'm adding the rest: "And I would hope that with their big advantage of bringing money home at a very low rate, that they would invest in infrastructure and things. But our experience has been that they will do dividends. They will do stock buy-backs and things like that. I think it’s insignificant.) See this link article for a full report.

There have been hundreds if not thousands of articles since the tax bill passed on December 20. 2017, wondering when its impacts might show up in consumer spending. The BEA release of the "Advance Estimate" of GDP on April 27 added momentum to the doubters when it showed real personal consumption expenditures (PCE) rose only 1.1 percent in the first quarter from the fourth quarter of 2017 at a seasonally adjusted annual rate All numbers in this blog are seasonally adjusted unless we say otherwise) after a very strong 4.0 percent rise in the fourth quarter of 2017 from the third quarter.

Furthermore, new data on retail sales received from the Census Bureau on May 25 (go to the bottom of the page of this link) shows that these sales peaked in November 2017 and were below that level in December 2017 as well as in January and February 2018. Note that these data supersede those in the May 15 Census Bureau release for April data.

Total retail and food services sales hit a new record in March of $496.0 billion, up 0.7 percent from February and 5.1 percent above March 2017. The April total was $497.1 billion, up 0.3 percent from March and 4.6 percent above April 2017.

Every month keeps showing new records for both the number of people employed and real disposable personal income. Consumer confidence in all major surveys (Bloomberg, The Conference Board and the University of Michigan) is either close to record highs or the highest so far this century.

All those facts suggest that we will see many new records for total retail and food services sales as well as PCE in the next two or three years. That spending will generate even more economic records and drive the naysayers into retreat. Keep watching.

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