Consumer spending comprises 70% of all U.S. economic activity, making the health of the U.S. consumer vital to growth. Let's see how healthy or not that state currently is.
The jobs market is central to this question: if consumers can find jobs and wages are rising, there is a greater likelihood that consumer spending will increase. The reverse is true as well. Thankfully, the U-3 and U-6 unemployment rates are near multi-decade lows:
U-3 (in blue) - the more widely reported unemployment rate - is at its lowest level since the 1960s. The less-widely reported U-6 rate (in red) - which includes those marginally attached to the labor market and those employed part-time for economic reasons - is near its lower reported level.
The employment/population ratio - which dipped sharply at the end of the recession (left chart) - has been steadily rising for the last five years (right chart), which means the percentage of people employed relative to the civilian labor force continues to rise.
And the four-week moving average of initial unemployment claims - like several other jobs market statistics - is near a multi-decade low.
All this data means that the jobs market is in great shape.
Wages, Income, and Credit
Income less transfer payments has grown more solidly, but remember that this data includes income from investments along with business-owner income. It's not representative of what most people are experiencing.
And mortgage rates are coming down, making housing more affordable.
Total retail sales (top chart) dipped at the end of last year, but have rebounded. The Y/Y percentage change (right chart) dipped as well, but has since risen. Retail sales ex-autos (bottom two charts) exhibit the same behavior.
Sentiment has rebounded to near its recent high levels.
Conclusion: From the consumer's perspective, it doesn't get much better than this: the jobs market is very strong, which has (finally) led to faster wage increases. Credit is available. As a result, consumers are spending at a decent clip. And the rebound in sentiment supports the idea that spending should increase in the coming months.
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