January's consumption decline was not simply a smaller dollar sales total. BEA reported on March 1, 2017 that nominal personal consumption expenditures rose 0.2 percent while real consumption fell 0.3 percent. For a business trying to interpret demand, that distinction separates spending at current prices from spending adjusted to remove price changes. [BEA 17-08][BEA 17-04]

The component explanation gives the headline more shape. BEA said January's real decline primarily reflected lower spending on services, notably utilities, and durable goods. Those named categories do not establish that every consumer market contracted. The release identifies contributors to the total, not a common experience shared by every seller or product. [BEA 17-08][BEA 17-04]

In its January 30 release, BEA had reported December real consumption growth of 0.3 percent, primarily reflecting increases in durable goods and services. The two accounts therefore describe opposite contributions from those broad categories. This is a comparison between successive release vintages in one BEA evidence chain, not independent corroboration or a calculation from an unrevised series. [BEA 17-08][BEA 17-04]

The real measures here use chained 2009 dollars, and the monthly percentage changes are not annualized. Our market reading is to separate a pricing question from a volume question before changing a demand assumption. A utility-related contribution warrants examining the relevant category; it does not establish a weather explanation. Likewise, a durable-goods decline is a reason to seek product-level evidence, not proof that a particular firm's customers withdrew. The useful follow-up is the matching market's own sales and price information. [BEA 17-08][BEA 17-04]

Source documents

  1. Personal Income and Outlays, January 2017 | U.S. Bureau of Economic Analysis (BEA)https://www.bea.gov/news/2017/personal-income-and-outlays-january-2017
  2. Personal Income and Outlays, December 2016 | U.S. Bureau of Economic Analysis (BEA)https://www.bea.gov/news/2017/personal-income-and-outlays-december-2016