Durable Goods Spending Strong, But Slowing Growth Ahead

While the growth in durable goods consumer spending in May remained above average, the rate of growth decelerated for the second month in a row.

While the month-over-month growth in durable goods consumer spending in May remained above average for the 21st consecutive month, the rate of growth decelerated for the second month in a row, dropping to its lowest rate since August 2017. Technically, the annual rate of growth decelerated in May, but by just 0.1 percent. The annual rate has been virtually unchanged since May 2017.

Real consumer durable goods spending in May 2018 was $1,780 billion real dollars (seasonally adjusted at an annual rate), which was an all-time high. Durable goods consumer spending accounted for its highest percent of total consumer spending ever in May. Low interest rates have helped boost durable goods spending as a percent of total consumer spending. But, with the 10-year Treasury rate rising year over year, there may be further deceleration in the rate of growth in durable goods consumer spending ahead.

Below are key spending categories that lead the most important manufacturing new orders and production indices.

Accelerating Growth: food/beverage, other non-durable goods

Decelerating Growth: air transportation services, appliances, clothing/footwear, durable goods, electronics, medical care, motor vehicles/parts, pleasure boats, total consumer 

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