Consumer Economic Trends March 2016

Consumer Economic TrendsMarch 2016

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Consumer Economic Trends – March 2016

3/15/16 ConsumerEconomicsChartbook - CKMcKay 2

Summary• Recentconsumereconomicindicatorshavebeendecidedlymixed

keepingtheFedonhold• Januarydisposableincomewasup0.5%,butFebruaryaverageweekly

earningsdeclined0.1%• Consumerspendingwasup0..5%inJanuary,retailsalesdeclined0.1%

inFebruaryandJanuary’spreviouslyreportedgainwasreviseddowntoadeclineof0.4%

• Februaryjobgainswerestrongat242,000plustherewereupwardrevisionstopriormonths.Andthebroaderemploymentratioscontinuedtheirpositivetrends

• Consumerspausedtheirrecentrunofrevolvingdebtincreaseswhichcouldexplainthedipinretailsales

• Februaryconsumersentimentwasessentiallyunchangedat91.7stillwelldownfromthe12monthhighof96.1inJune

• OfsomeconcernisthecontinueddeclineinsmallbusinessoptimismwhichisnowatitslowestlevelsinceFebruary‘14

ListofCharts1. Disposableincome2. Consumerspending3. Retailsales4. Ecommercesales5. Jobsgrowthvs.UIclaims6. Employmentratios7. Wagegrowthvs.inflation8. Revolvingcredit9. Purchasevolume10. Consumersentiment11. Smallbusinessoptimism

Disposable personal income growth gained significantly in January, but still remained tepid at 4.0% year-over-year


17.0%

17.5%

18.0%

18.5%

19.0%

19.5%

20.0%

20.5%

21.0%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Personal Income and Savings

Disposable Personal Income Y/Y Growth% Personal Savings Rate % Tax Burden % Personal Income (right scale)

Source:BureauofEconomicAnalysis

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January consumer spending year-over-year growth jumped in January as the decline in gasoline prices was lapped easing the drag on nondurables spending


-3%-2%-1%0%1%2%3%4%5%6%7%8%9%

10%

'11 '12 '13 '14 '15 '16

Nominal Consumer Spending Growth Y/Y%

Total Consumer Spending

Durable Goods

Nondurable Goods

Services

Nondurable Goods ex. Energy

Source:BureauofEconomicAnalysis

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February retail sales growth disappointed and January’s unexpected gain was revised to a decline. Gasoline station sales growth dipped but remained on a more positive trajectory due to the lapping of the decline in gasoline prices


-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

'11 '12 '13 '14 '15 '16

Retail Sales Growth Y/Y%

Total Retail Sales Excluding Autos Ex. Autos & Gasoline Stations Gasoline Stations (right scale)

Source:CensusBureau

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During the last four quarters e-commerce contributed over 55% of retail sales growth… falling gasoline sales has accelerated e-commerce’s growth impact


-45%

-30%

-15%

0%

15%

30%

45%

60%

75%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

'07 '08 '09 '10 '11 '12 '13 '14 '15

E-Commerce Sales Growth Y/Y%

Total Retail Sales E-commerce Total ex. E-commerce E-commerce Overall Growth Contribution 4Q Average (right scale)

Source:CensusBureau

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February’s jobs gains were better than forecasted, reversing January’s disappointing result. Initial claims remain historically low… 12 month average job gains at early ‘06 levels


250 280 310 340 370 400 430 460 490 520 550 580 610 640 670 700 -900

-800-700-600-500-400-300-200-100

0100200300400500600

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Monthly Employment Gains vs. Unemployment Claims (Thousands)

Monthly Payroll Employment Gains 4 Week Moving Average Unemployment Claims (right scale inverted)

Source:BureauofLaborStatistics

Return

The broader employment ratios have trended positively for the past several months, a sign of a strengthening labor market


1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

57%

58%

59%

60%

61%

62%

63%

64%

65%

66%

67%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Employment Ratios

Labor Force Participation Rate Employment-Population Ratio Unemployment Rate (right scale)


Return

Wage growth dipped unexpectedly in February dampening some of enthusiasm of an otherwise positive jobs report

3/15//16 ConsumerEconomicsChartbook - CKMcKay 9

-1%

0%

1%

2%

3%

4%

'10 '11 '12 '13 '14 '15 '16

Wage Growth vs. Inflation

Average Hourly Earnings Y/Y Growth CPI Y/Y % Change Core CPI Y/Y % Change


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Revolving credit growth has accelerated since early ‘14; however, as a percentage of disposable income revolving credit has remain stable at ~2ppt below its pre-recession level

3/15//16 ConsumerEconomicsChartbook - CKMcKay 10

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

$800

$825

$850

$875

$900

$925

$950

$975

$1,000

$1,025

$1,050

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Consumer Revolving Credit Consumer Revolving Credit Outstanding

Consumer Revolving Credit Y/Y% Growth (right scale)

Consumer Revolving Credit as a % of Disposible Personal Income (right scale)

Source:FederalReserve,Bureau ofEconomic Analysis

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Billions

Q4 payment card purchase volume growth was stable at 8.3%


-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

'08 '09 '10 '11 '12 '13 '14 '15

Purchase Volume Growth Y/Y%

Source:AXP,DFS,MA,VCompanyReports

Return

Consumer sentiment remained essentially unchanged and seems to be unable to gain much momentum


-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

40

50

60

70

80

90

100

110

120

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Consumer Sentiment

University of Michigan Consumer Sentiment Y/Y% Change (right scale)


Return

Small business optimism declined 1.0ppt from January and is now at its lowest since February ’14. The index has dropped 7.5ppt from its post recession peak


80

85

90

95

100

105

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Small Business Optimism

NFIB Small Business Optimism Index 6 Month Moving Average

Source:NationalFederation ofIndependent Business

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Consumer Economic Trends March 2016

Economy & Finance