July 30, 2015

Consumption grew at a 2.9 percent annual rate in the second quarter, up from a weather-depressed 1.1 percent rate in the first quarter. The biggest change was in durable goods. People who put off buying cars in the harsh winter weather instead bought in the second quarter, leading to a 7.3 percent rate of increase in durable good sales compared to a 2.0 percent rate in the first quarter. Consumption contributed 1.99 percentage points to growth in the second quarter compared to 1.19 percentage points in the first quarter.

The personal saving rate was 4.8 percent for the quarter, the same as the average of 2014. This should end speculation about why people are not spending their dividend from lower gas prices, since the data indicate they are. Consumption is at near-record highs as a share of GDP, which makes the frequent fretting over cautious consumers seem more than a bit peculiar.