Consumer Spending Growth Falls to 4.5-Year Low, but Personal Income Still Lags

Stealth Slowdown Unfolding

Wall Street is too optimistic on the economy, veteran forecaster warns from CNBC.

As the chart shows, real personal income and consumer spending growth are both in cyclical downturns.

Contrary to the notion of a “strengthening” economy, consumer spending growth has fallen to a 4 ¼-year low, as personal income growth continues to undershoot spending growth.

The consumer — which makes up about 70% of the economy — is getting hit with a six-year highs in inflation, so real wages are actually lower than a year ago.

The chart also shows that the income shortfall relative to spending is increasing, and since 2015 the cumulative shortfall is over 1% of GDP. Necessarily, that gap is financed by consumers taking on more debt.