Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Personal income rose 1.1% in February
Posted Under: Data Watch • PIC
Supporting Image for Blog Post

 
Implications: Friday's report on consumer spending drove a stake through the heart of the theory that the payroll tax hike or fears about the federal spending sequester were going to hurt consumer spending. "Real" (inflation-adjusted) consumer spending was up 0.3% in February after the same gain in January. Together, real spending is up at a 3.8% annual rate so far this year. As a result, we are now forecasting that real spending will be up at a 3% annual rate in Q1 versus the Q4 average. In addition, we are raising our forecast for Q1 real GDP growth to 3% (previously 2.5%). For all of 2013 (Q4/Q4), we have been forecasting a real GDP growth rate of 2.5 - 3%. It now looks like growth will be at the higher end of that range. The income numbers are a little trickier right now. Personal income rose 1.1% in February. However, most of the gain was due to tax-related fluctuations in dividends. Companies paid out dividends early in December to avoid the tax consequences of the New Year, artificially lowering payments in January. Now dividends are moving off of that artificial low and back toward normal. Even so, real private wages & salaries are up plow horse-like 1.9% from a year ago. This growth in income, combined with very low consumer financial obligations (debt service and other monthly payments) means consumer spending can keep growing. On the inflation front, the Federal Reserve's favorite measure of inflation, personal consumption prices, was up 0.4% in February but still up only 1.3% from a year ago. Core prices, which exclude food and energy, are also up only 1.3% from a year ago. Both are clearly below the Fed's 2% target. However, given the loose stance of monetary policy, look for inflation to move above the Fed's target later this year.

Click here for a PDF version.  
Posted on Monday, April 1, 2013 @ 10:09 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
The "V" Is Complete
Real GDP Growth in Q4 Revised Up to a 0.4% Annual Rate
New Single-Family Home Sales Declined 4.6% in February to a 411,000 Annual Rate
New Orders for Durable Goods Rose 5.7% in February
Housing Recovery Still Young
Existing Home Sales Rose 0.8% in February to an Annual Rate of 4.98 Million Units
Fed Still Inching Toward Optimism
Housing Starts Rose 0.8% in February to 917,000 Units at an Annual Rate
First Trust’s Wesbury and Stein #1 out of 100 for Home Price Forecasting
Say "Thanks" to Barney Frank
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.