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Stronger Spending As Consumers Run Saving Ratios Lower Again

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  • Nominal personal income growth was as expected in March at 0.5% M/M after an unrevised 0.3% in Feb, whilst nominal spending was stronger at 0.84% M/M (cons 0.6) after an upward revised 0.82 (0.76).
  • The latter’s upward surprise carried over in real terms, with 0.51% M/M (cons 0.3), after an upward revised 0.48% (initial 0.43) was offset by a larger downward revision to -0.32% (initial -0.22) in Jan.
  • The net of the March beat and revisions suggests a small disconnect with the monthly estimates after yesterday’s consensus of 3.0% for Q1 vs the outturn of 2.5% (which of course is corroborated by today’s latest 3M/3M print).
  • We noted after yesterday’s data the weakness in real goods consumption over the quarter (-0.4% annualized) but it was bounced back in March with a 1.1% M/M increase. On the flip side, real services spending was strong on a quarterly basis (4.0% for its strongest since 3Q21) but it faded to 0.2% M/M in March after a strong 0.6% in Feb.
  • A recent tailwind from running down of saving rates: With nominal spending growth outstripping still solid disposable income growth of 0.5% M/M, the household savings ratio fell four tenths to 3.2%. It's down almost 1pp in just two months and is close to the 2.7% multi-year low seen in Jun’22.
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  • Nominal personal income growth was as expected in March at 0.5% M/M after an unrevised 0.3% in Feb, whilst nominal spending was stronger at 0.84% M/M (cons 0.6) after an upward revised 0.82 (0.76).
  • The latter’s upward surprise carried over in real terms, with 0.51% M/M (cons 0.3), after an upward revised 0.48% (initial 0.43) was offset by a larger downward revision to -0.32% (initial -0.22) in Jan.
  • The net of the March beat and revisions suggests a small disconnect with the monthly estimates after yesterday’s consensus of 3.0% for Q1 vs the outturn of 2.5% (which of course is corroborated by today’s latest 3M/3M print).
  • We noted after yesterday’s data the weakness in real goods consumption over the quarter (-0.4% annualized) but it was bounced back in March with a 1.1% M/M increase. On the flip side, real services spending was strong on a quarterly basis (4.0% for its strongest since 3Q21) but it faded to 0.2% M/M in March after a strong 0.6% in Feb.
  • A recent tailwind from running down of saving rates: With nominal spending growth outstripping still solid disposable income growth of 0.5% M/M, the household savings ratio fell four tenths to 3.2%. It's down almost 1pp in just two months and is close to the 2.7% multi-year low seen in Jun’22.