Real Consumer Spending in January Was Above the Pre-Recession 2007 Level for 4th Straight Month
In today's BEA report on Personal Income, there was some pretty good news on real personal consumption expenditures: On an annual basis, real consumption spending increased by 2.8 percent in January, which was the largest annual improvement in four years, since January 2007 (see bottom chart above). Measured in constant 2005 dollars, real consumer spending dipped slightly by -0.1 percent in January from the all-time record high in December, but consumer expenditures last month of $9.44 trillion was the second highest month on record. January was the fourth consecutive month that real consumer spending was above the December 2007 level of $9.35 trillion.
Update: Real disposable income also had an impressive 2.7% increase in January from its year ago level, the largest annual gain since March 2007 almost four years ago (except for the tax-rebate spikes in May and June of 2008). The personal savings rate increased in January to 5.8% from 5.4% in December, the highest monthly savings rate since last summer. Taken together, this is a "hat trick" of good economic news: real disposable income and real consumer spending are both close to record-high levels, and personal savings at 5.8% is almost a full percent above the 4.9% average over the last 25 years.