Editor's Note: Below is a brief excerpt from today's Early Look written by U.S. Macro analyst Christian Drake. Click here to learn more about the Early Look.
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Income & Consumption … Assuming a largely flat trend in average weekly hours, the only way to get an acceleration in aggregate income growth is via accelerating payroll growth and/or accelerating wage growth. The larger trend in late-cycle payroll growth will invariably be further deceleration and earnings growth will have to increasingly shoulder responsibility for maintaining or soldiering income growth higher .… but not this month as payroll growth should be supportive of aggregate income growth, and consumption growth by extension. The organic trend in income growth will become increasingly important to buttressing consumption growth as the tailwind from a declining savings rate progressively diminishes. Recall, the savings rate was up a full +100bps in February off the December lows (which had be falling 80-100bps year-over-year and printed just north of all-time lows to close 2017) and the savings rate comps get progressively harder over the balance of the year. |
