Disposable Income Growth Forecast To Improve

Behind the latest round of forecasts from the 50 economic groups surveyed each month by Blue Chip Economic Indicators is a bit of good news for foodservice operators: Disposable personal income growth should begin to improve, beginning in the second quarter of this year and on an annual basis, growing 2.5% in 2014, the best real growth since ’06.

Real DPI growth has been negative or very sluggish for more than five years. The quarterly swings in the fourth quarter last year and the first quarter of ’13 have been dramatically affected by the end of the payroll tax holiday in January and the spate of early bonus and dividend payouts in the fourth quarter in anticipation of higher taxes. DPI growth spiked 6.2% in the fourth quarter then fell an estimated 5% in the first. That decline is expected to push down annual DPI growth to only 0.8% this year.

But beginning with the second quarter, annualized DPI growth is expected to range from 2.2% to 2.7% over the next seven quarters. Personal consumption spending also is expected to improve during the same period.

On the national level, the consensus forecast for real growth of gross domestic product in the U.S. rose 0.2 point to 2.1% for ’13 and held at 2.7% for ’14.