Aggregate consumption drops as income ex-current transfers rises. The pattern of disaggregated consumption pattern suggests tariff-induced front-loading drove some of the support for consumption in December.

Figure 1: Personal consumption expenditures (black, left log scale), income ex-current transfers (red, right log scale), both in bn.Ch.2017$ SAAR. Source: BEA.
 

Figure 2: Personal consumption expenditures on durables (blue, left log scale), sum of nondurables and services consumption (tan, right log scale), both in bn.Ch.2017$ SAAR. Source: BEA.

Flat services and nondurables consumption suggests (i) declining perceived permanent income (as Friedman defined it), and (ii) heightened uncertainty. However, one should expect smaller effects of uncertainty on services and nondurables than on durables, so I’d stress (i) for services/nondurables.

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