Personal Income and Spending came in about in line with analysts' expectations, with Personal Income up 0.4% month-over-month and Personal Spending up 0.3% month-over-month.
Here's a look at the year-over-year growth pictures for Personal Income (top) and Personal Spending (bottom). The most recent measurement has Personal Income growth 4% year-over-year and Personal Spending growing 3% year-over-year.
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Here's a look at the difference between Personal Income growth and Personal Spending growth.
Interestingly, the difference between Personal Income growth and Personal Spending growth continues to be stubbornly high. This is shown by looking at where the difference between the two measures is right now, in the upper quartile of historical experience. The difference is currently about 1%.
The American Consumer's Fear Periods
For a while now, Personal Income has been growing much quicker than Personal Spending. This observation has led to some high profile comments from the likes of former Fed chairman Ben Bernanke and others to state that Americans are saving too much.
During periods when income is growing faster than spending, another word to describe the state of the American consumer is that the consumer is in a state of fear. This fear is brought on by concern about the state of the state of the American (and global) economy. This causes Americans to be more cautious with their money, taking more in than spending.
The American Consumer's Profligate Periods
On the other end of the consumer mindset is profligacy. This is the situation when consumers are spending much more than they are making in income, using credit cards and other forms of finance to keep their spending going.
To an extent, the two most recent examples of when the American consumer was acting this way was during the technology and housing booms.
How Does the Picture Look by U.S. Presidents?
Presidential policies can sometimes influence the state of the American consumer.
Which U.S. president would you guess is the fear president? Which president would you guess is the profligate president?
Here's a look.
A Look at Personal Income
First, here's a look at the two separately.
The following plots the growth or decline in Personal Income by U.S. president since 1960.
The vertical axis is the percentage growth through the given administration. The horizontal axis is the number of months the given individual was in office.
Interestingly, the Personal Income picture paints Reagan as the king of income growth.
On the other end, Obama come out as the bottom dweller.
A Look at Personal Spending
Here's the Personal Spending picture.
Personal Spending has been quite weak during the Obama Administration, placing him in last place.
On the other end, Reagan comes out on top in American consumers' Personal Spending growth.
Putting the Two Together
It's tough to tell with the two separated which president is the top fear president, and which U.S. president is the profligate president.
Here's the answer.
Interestingly, the fear president is Nixon, where Personal Income grew by, on average, 0.44% more than Personal Spending.
On the other end, Ford is the profligate president, with spending expanding by, on average, 0.96% quicker than income.
Presidents & fear - Conclusion
In looking at the performance of Personal Income and Personal Spending across American presidents, some clear patterns emerge on which presidents' administrations saw profligate consumer experiences, and which presidents saw consumers live in fear.
The president most deserving of the fear president is Richard Nixon.
On the other end of the spectrum, the president more deserving of the profligate president is Gerald Ford.
The post Which U.S. President is the “Fear” President, and Which is the “Profligate” President? appeared first on ValueWalk.
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