Consumer Metrics Institute: “Is it 2007 once again?”

By John Rubino 

The Consumer Metrics Institute is out with commentary on the latest GDP revision. Here’s an excerpt:

As we noted last month, on the surface a 2.38% annualized growth rate at nearly full four years into a recovery is good news — and a growth rate that many other global economies would currently be pleased to be reporting. And looking at the details provides us with some reasons for optimism:
– Consumer spending was sustained in spite of tax increases,

– Fixed investments continued to grow (although at a slower pace than in the prior quarter),

– Exports were still growing (slightly) after the prior quarter’s of contraction.

But one overriding issue in the data continues to suggest a reason for caution:

– Real per capita disposable incomes took a major hit, and it would appear that consumers had to dip into savings to sustain spending levels in the face of the January increase in FICA taxes. The astonishing annualized contraction of real per capita disposable income bears repeating: -9.03% — a full percent and a half worse than the -7.52% contraction rate recorded in the first quarter of 2009 (the worst quarterly contraction recorded during the official duration of the “Great Recession”).

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