Despite the reduction in estimated fourth quarter GDP growth the U.S. consumer provided some stronger than expected results in this week’s data. Personal income and expenditures were both significantly higher than their prior readings as of the end of January.
Income increased by 0.60% compared to the prior period’s 0.30% and expenditures rose by a robust 1.8% compared to -0.10% for the month of December.
Interestingly, as consumers saw their incomes and expenditures increase in January their confidence actually declined in February according to the Conference Board. The index, which is currently at 102.9, declined from a prior reading of 106.0.
This example of conflicting data, stronger consumer spending alongside declining confidence is making it difficult for investors to have a high level of conviction in trying to discern the strength and direction of the overall economy.