Consumer Spending and Wage Growth Revised by the BEA

Investors have been feeling the uncertainty of volatile stock markets this year.  People who are seeking to build wealth, or protect the prosperity they have already established, may be asking a series of questions, such as, “Are we at the peak?”  “Is there still room for growth?”  “Has the bull run as far as he can run?”  This type of uncertainty can create emotions of fear, doubt, and decision paralysis. Here are some new data released earlier this week that may ease investor concerns.

Earlier this week, “The Bureau of Economic Analysis (BEA)…finished revising its estimates for household income going back to 2012. The bottom line is that Americans have been making more money than we thought. BEA increased income estimates from 2012 to 2018 by $3 trillion. The update was driven by new statistics and data from the IRS. During the period 2012-2017, the average annual rate of growth of real disposable personal income was revised up to 2.2% from 1.8%. In addition, consumer savings rates were revised upward. The 2017 savings rate went to 6.7% from 3.4%! That’s a big deal, and it’s going to have a direct and positive impact on prior gross domestic product (GDP) figures. Remember, the BEA is in charge of measuring economic growth and declaring recessions.”  Mike Verity, CFA

 
 US Personal Savings as a % of Disposable Personal Income Report - Old

US Personal Savings as a % of Disposable Personal Income Report - Old

 
 US Personal Savings as a % of Disposable Personal Income Report - Revised

US Personal Savings as a % of Disposable Personal Income Report - Revised

The BEA’s new positive outlook on consumers, combined with the recent GDP rate of 4.1% and a strong earnings season, all give evidence of a strong economy. 

Can the bull still run this year?  We believe that it can! If you are sitting in mostly cash or you aren’t sure how to position your current portfolio, then give Lighthouse Financial a call and schedule your free consultation with Danae McDaniel.


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