News & Events

Economic Advisor: September 5, 2018
September 5, 2018


Consumers’ outlook on the economy declined a bit, despite incomes and spending seeing growth. Meanwhile, weekly layoffs notched up.

Consumer Sentiment

The Index of Consumer Sentiment for August dropped 1.7 percent from July’s 97.9 to 96.2 for the month, the University of Michigan Surveys of Consumers reported last week. This was its lowest level since January.

Consumers’ opinions regarding current economic conditions declined 3.6 percent from July’s 114.4 to 110.3 in August, and their expectations concerning the economy’s prospects in the near future ticked down 0.2 percent from 87.3 in July to 87.1 in August. So, what is troubling consumers?

“These results stand in sharp contrast to the recent very favorable report on growth in the national economy,” noted Richard Curtin, chief economist of the Surveys of Consumers. “The dominating weakness was related to less favorable assessments of buying conditions, mainly due to less favorable perceptions of market prices and to a lesser extent, rising interest rates.”

Personal Incomes and Spending

Americans’ incomes grew 0.3 percent, or $54.8 billion, during July, according to last week’s report from the Bureau of Economic Analysis. Similarly, disposable personal income (DPI), which is personal incomes after income taxes, also increased 0.3 percent, or $52.5 billion. Real DPI, which is DPI adjusted for inflation, grew by 0.2 percent.

Personal consumption expenditures (PCE), which totals household spending, grew 0.4 percent or $49.3 billion in July, and real PCE increased 0.2 percent. Personal outlays, which combines PCE with interest payments and transfer payments, rose $52.7 billion in July.

Personal savings totaled $1.04 trillion in July, and the personal saving rate, which is personal savings expressed as a percentage of DPI, was 6.7 percent, which marked a slight drop from June’s 6.8.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending Auguat 25 increased to 213,000, a gain of 3,000 claims from the prior week’s total of 210,000, according to last week’s report from the Employment and Training Administration. This was slightly larger than economists’ predictions of a slight increase to 212,000.

The four-week moving average, which is considered a more stable measure of jobless claims, dropped to 212,250, a decline of 1,500 claims from the preceding week’s average of 213,750 claims. This marked the lowest four-week average since December 13, 1969 ‘s average of 210,750.

The Administration’s latest report marked the 182nd straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Tuesday — Construction spending for July from the Census Bureau; car and truck sales for August from the auto manufacturers.
  • Wednesday — The balance of trade for July from the Census Bureau.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; factory orders for July from the Census Bureau.
  • Friday — Payrolls, unemployment rate, and average hourly earnings for August from the Census Bureau.

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