Income Growth Could Pressure Consumption Growth
The gap between wage/income growth and consumption has grown uncomfortably wide, perhaps signaling weaker consumption growth ahead.
As we discussed in this week's video, a lot of the midweek economic data was less than inspiring, with slowing durable goods orders, a depressing June (and full-year reductions, too) motor vehicle sales forecasts, and another monthly decline in pending home sales.
Some analysts cheered the upwardly revised first-quarter GDP growth estimate. From the first guess to this third revision, the estimate has moved from 0.7% to 1.4% (and there will be the annual, comprehensive revision and re-benchmarking next month, so this isn't final yet). We view the better GDP data as too backward-looking to be much help.