U.S. Economics – Consumers

Intro

We monitor consumer income, savings, job growth, and other consumer measures because of their potential to alter the trajectory of consumer spending, the largest component to GDP, which ultimately plays a role in the path of interest rates. As it stands today, the broad consumer backdrop has not weakened to levels that would be indicative of imminent recession.

The Signals:

• • Consumer Income & Savings
    • Wages and salaries rose 4.8% year-over-year (y/y) in June 2025 while personal saving as a percentage of disposable income remained unchanged at 4.5%.
      • Notably, the current y/y growth rate for wages and salaries is 0.7 percentage points below the prior year’s y/y growth rate of 5.5%, which is a rate of change improvement from the cycle low made in March of this year when the delta was -3.5 percentage points (3.8% y/y in March 2025 compared to 7.3% y/y in March 2024).
      • The personal saving rate has experienced a similar rate of change improvement, which should be positive for future consumption capacity.
  • Weekly Hours Worked & Average Weekly Earnings
    • Average weekly hours worked inched higher to 34.3 hours in July, helping boost average weekly earnings to their fastest y/y pace since January 2023.
      • Average weekly earnings accelerated by 0.6% m/m, putting the y/y pace at 4.2%, well above the 2015 to 2019 average of 2.7%.
  • Nonfarm Private Payrolls
    • Total private nonfarm payrolls increased by 83,000 in July, but most of the attention from the report was related to revisions and the overall lack of certainty around the numbers.
      • On a year-to-date basis, private payrolls have been overstated by roughly 340k jobs when looking at the difference between initial estimates and final revisions.
      • The YTD tally is nearly half a million when looking at total nonfarm payrolls, which includes government payrolls.
  • Consumer Spending
    • Real Personal Consumption Expenditures increased 2.1% y/y in June 2025, reaching $16.35 trillion compared to $16.01 trillion in June 2024.
      • Real goods spending increased 2.9% y/y to $5.58 trillion, up from $5.42 trillion in June 2024.
      • Real services spending increased 1.7% y/y to $10.79 trillion, up from $10.61 trillion in June 2024.

Key Takeaways:

• We monitor consumer income, savings, job growth, and other consumer measures because of their potential to alter the trajectory of consumer spending, the largest component to GDP, which ultimately plays a role in the path of interest rates.
• The broad consumer backdrop has not weakened to levels that would be indicative of imminent recession.

Visuals:

Source: Macrobond

Market Trends:

Source: Macrobond

The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance.  The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.