Long Term Perspective
Typically, consumers increase spending in direct proportion to gains in disposable income. Since 1996, spending has outpaced income, as consumers felt wealthier from stock market gains and housing appreciation. Notice how the gap widened in 1998 and 1999. It didn't narrow very much in 2000 even though the stock market headed south and consumer wealth stopping increasing exponentially!

Short Term Perspective
The spurt in real disposable income sure looks odd! The faster income growth is due to the tax rebate checks, which were mailed out this summer. Since these figures are annualized, they appear larger than the actual rebates. Nevertheless, they represent a sizable improvement in disposable income - that ended up in savings accounts.

Real GDP vs. Final Sales   •   Real Consumer Spending vs. Real Income   •   Debt Burden vs. Savings Rate

Business Fixed Investment vs. Net Cash Flow   •   New Orders   •   Housing Starts vs. Mortgage Rates

Merchandise Exports vs. Trade Weighted Dollar   •   Merchandise Imports vs. Trade Weighted Dollar