Today’s update on personal consumption spending in July (scheduled for release later this morning at 8:30 am eastern) is projected to report a rise of 0.2% vs. the previous month, based on The Capital Spectator's average econometric forecast. That’s below the previously released 0.5% increase for June. Meanwhile, the Capital Spectator’s average forecast for July is slightly below the consensus predictions based on surveys of economists.
Here's a closer look at the numbers, followed by brief summaries of the methodologies behind The Capital Spectator's estimates:
VAR-3: A vector autoregression model that analyzes three economic time series in context with personal consumption expenditures. The three additional series: US private payrolls, personal income, and industrial production. The forecasts are run in R with the "vars" package.
R-1: A linear regression model that analyzes the historical record of personal consumption expenditures in context with retail sales. The historical relationship between the variables is applied to the more recently updated retail sales data to project personal consumption expenditures. The computations are run in R.