Moderate Growth Ahead For Electronics Production

Real Disposable Income. July real disposable income was $12.7 billion (seasonally adjusted annual rate), an all-time high. In July, real disposable income grew 2.7% compared with one year ago. The month-over-month rate of growth was below 3% in four of the last five months. The annual rate of growth has decelerated steadily since August 2015.

Real Electronics Spending. Real consumer electronics spending was $431.9 billion (seasonally adjusted annual rate) in July, up 13.2% from a year ago. While the rate of growth has accelerated since November 2015, the current rate of growth was still below the historical average. But it does appear that the annual rate of growth in electronics spending has bottomed out.

Interestingly, electronics spending grew faster than disposable income from 1994 to late 2014, almost without exception. But, since late 2014, disposable income has grown faster than electronics spending. Some of this is likely due to the increased savings rate over the period. But electronics spending would need to grow faster than income in the upcoming months if the two data series were to return to the relationship they had during the previous two decades.