Weekly Market Insight . Personal Income & Personal Consumption Expenditures . 10/31/11

Weekly Market Insight • Personal Income & Personal Consumption Expenditures • 10/31/11

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Personal Income &

Personal Consumption Expenditures
Monthly Percent Change, Seasonally Adjusted

October 31, 2011
Sources: U.S. Bureau of Economic Analysis, Grubb & Ellis
Consumer spending increased 0.6 percent in September, surprising in light of the meager 0.1 percent gain in personal income. As a result, the saving rate plunged to 3.6 percent, its lowest level since before the recession. This is the third consecutive month that spending has outpaced income. There are several reasons for this. Pent-up demand has been building, coaxing consumers to loosen up a little despite the abysmal consumer confidence readings. Consumers are borrowing again for cars, educations and a few other categories, which boosts their spending power, although they continue to pay down or default on credit card and mortgage debt. Also, Hurricane Irene could have depressed spending in August and accelerated it in September. Consumer spending is not yet strong enough to lead the U.S. into a virtuous cycle where spending leads to more hiring, which in turn leads to further spending. But neither is it so weak that it portends a near-term recession. This is a hopeful sign for retailers and shopping center landlords as the critical holiday shopping season approaches.
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.

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Robert Bach
Senior Vice President, Chief Economist

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© 2011 Grubb & Ellis, all rights reserved.

About CRE Northwest

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