The Wall Street Journal doubled today with the view that consumer spending is strong:
U.S. households increased consumption in July providing confidence that the economy's decade-long expansion continued to roll despite declining factory activity and global growth. Personal consumption expenditure, a measure of household consumption, increased a seasonally adjusted 0.6% in July from June, a gathering from the previous two months, the Ministry of Commerce said Friday, and continued a solid performance from the economy's most important driver.
First, this is not adjusted for inflation, although real numbers are released at the same time as nominal figures. Second, look at monthly consumer spending growth over the last couple of decades:
It's too noisy. There is no way to extract useful information from this. If you instead compare year-on-year growth – which makes more sense initially – you get this:
There is still some noise, but it's also a clear signal: consumer spending grew in July to about as much as June and May and April and March. It's actually a little below the average over the last couple of years.
I have to note that this works in both directions. If you look at personal income, it did not increase at all between June and July. It was completely flat. Bad news! But if you look at growth from year to year, things look a little different:
Revenue growth has shown some decline over the past year, but it's still pretty positive.
I know these things seem a little boring, but it does matter if you really want to know the economy. The summary of the Journal of July is that consumer spending was strong, but revenue growth was weak. In reality, they were both pretty average.