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US Consumers in 2017: Working, Confident and Spending

U.S. consumers were in a festive mood this year. Healthy economic indicators, including a record stock market performance, robust job market, low inflation and rising wages all kept consumer confidence high and spending rising faster than income for most of 2017. Consumers continued to use their credit cards and slowed down their savings and investing.

As we approach year-end, continued financial market gains despite interest rate hikes, a holiday shopping season that significantly beat expectations, and impending income tax rate reductions for individuals and corporations expected to stimulate further economic expansion all point to sustained good cheer well into 2018.


U.S. employment increased by 2 million jobs in 2017, driving the unemployment rate down from 4.8% in January to 4.1% by year-end. The number of unemployed people fell during the year by almost 800,000. Jobless claims have been near generational lows for the past several months.

Most of the new jobs created in 2017 were in professional and business services, manufacturing, health care and construction. Employment in retail, by contrast, fell by 66,000. And, despite all the hype about reshoring, employment in the textile and apparel sectors dropped by almost 20,000.


Consumer Confidence, which has been improving steadily since mid-2009, rose from 109.4 to 129.5 in the 12 months ending November. Though the Present Situation index started out the year at a higher level than the Expectations index, both measures improved within the year.

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Disposable income and spending

Total personal disposable income increases accelerated each month in 2017, rising from 2.3% year-over-year in January to 2.9% in November as wages and investment income finally began to catch up with increased productivity in the U.S. labor and financial markets.

Helped by low inflation rates that started out the year at around 2.2% but drifted down to just about 1.7% for most of the rest of the year, monthly personal consumption expenditure increases ranged between 4.3% and 4.6% during the year. The sharpest rise was in the consumption of durable goods. Though December data have not yet been released, brisk holiday shopping promises to bring good tidings of spending on electronics, home goods, jewelry and other non-discretionary categories.

Absent from the celebration were apparel and footwear, where consumers managed to spend less, helped by price deflation and day-in, day-out discounting that make apparel among the most promotional categories in retail.

Personal savings

With spending outpacing income in each of the last 20 months, and the improving employment situation and financial markets helping restore consumer confidence in the future, there is less of a perceived need to save for a rainy day.

The personal savings rate, which hit a two-year high of six percent back in November 2015, has been steadily drifting lower since (except for a small pickup in January and February of this year), and now stands at 2.9%

Consumer credit

Consumer credit, which shrank dramatically during the Great Recession but began a steady long-term increase in early 2012, remained relatively stable this year.

During 2017 the monthly year-over-year increase in adjusted revolving credit, which is comprised predominantly of credit card debt, peaked at 6.8% in February, then steadily drifted lower to almost 5 percent, before increasing to 6 percent in October.