According to the Bureau of Economic Analysis, “Personal income increased $71.1 billion (0.3 percent at a monthly rate) in November. Disposable personal income (DPI)—personal income less personal current taxes—increased $61.1 billion (0.3 percent). Personal outlays—the sum of personal consumption expenditures (PCE), personal interest payments, and personal current transfer payments—increased $78.2 billion (0.4 percent) and consumer spending increased $81.3 billion (0.4 percent). Personal saving was $968.1 billion and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.4 percent in November.”
Bloomberg highlighted, “Spending continues to be supported by solid earnings. Wages and salaries grew 0.6% in November, the most since March. “
Higher wages, slightly higher disposable income and spending, without much change in the savings rate — with less inflation — describes a basically healthy demand and supply context heading into year-end holidays that will skew month-to-month results.
Downstream demand capacity is good. Upstream supply capacity is well-matched to demand. Midstream capacity — still correcting itself from late-pandemic excesses — is beginning to reach equilibria. Yesterday Todd Davis at FreightWaves sent along, “Demand concerns still exist in the coming year, but the [freight] market is experiencing a strong supply side correction that will carry that momentum deep into 2025. A mild peak season with rejection rates around 9%-10% may be the best thing for the truckload market in the long run as it will tamp down any knee-jerk responses from carriers that are on the fence about deciding to leave or stay.” In other words, the quicker the weakest players leave, the better price-potentials for those remaining.
Another focused-look at food is provided in the chart below. The blue line reflects “real” — inflation-adjusted — grocery prices. In November 2019 US consumers purchased $1075.5 billion in food-at-home. Last month we bought $1171 billion in groceries. Of course the “feels like” temperature for grocery prices is much higher as shown in the red line of nominal prices. It remains mysterious to me why American consumption of food has stayed so high, well above pre-pandemic patterns even in the face of high food inflation. But the new pattern is now well-established — and reflects higher capacity demand and supply for food which enhances systemic supply chain resilience.
