Weekly Market Insight . Real Disposable Personal Income & Personal Consumption Expenditures; Monthly Percent Change, Seasonally Adjusted . 5/30/11

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Real Disposable Personal Income &

Personal Consumption Expenditures
Monthly Percent Change, Seasonally Adjusted

May 30, 2011
bobsbox_20110531.jpgSource: U.S. Bureau of Economic Analysis, Grubb & Ellis Personal income and consumer spending growth were weak in April, underscoring a big reason for the economy’s recent soft patch. Real disposable personal income (income less taxes, adjusted for inflation) was flat for a second month in a row while real personal consumption expenditures grew just 0.1 percent. Sluggish wage growth plus rising energy and food prices have restrained real income growth this year, which has kept spending growth mired at a modest 0.1 percent in four of the past five months. Without stronger income growth, consumer spending, which accounts for 70 percent of GDP, is unlikely to accelerate enough to lead the economy onto higher ground. The plodding rate of spending growth is having a chilling effect on leasing demand for commercial real estate, particularly shopping centers. But there is some cause for guarded optimism. In a separate report last week, the Bureau of Economic Analysis said corporate profits reached an all-time high in the first quarter of this year, confirming that businesses have the cash to prolong the recent, improved pace of hiring. Stronger job creation, if it can be sustained, will boost wages, personal income and, eventually, retail sales as households get more money to spend.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.

Need more information? Contact:

Robert Bach
Senior Vice President, Chief Economist
312.698.6754

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© 2011 Grubb & Ellis, all rights reserved.
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About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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