One of my favorite responses to those who ask me how things are going is “that I am still aliveâ€. This is the way I feel about the economic events of 2013 as they relate to the average survivor of this year.
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One of the issues of any chart I provide is the context or presentation of the data plotted.
Usually, I believe the fairest presentation is year-over-year change with a discussion on the three month trend line of the year-over-year change. I am not sure how people got into their minds that the growth or contraction month-to-month was important when much of the data has these kinds of issues:
- the initially reported data has a high degree of inaccuracy,
- the seasonally adjusted data has methodology issues,
- the reporting month usually is subject to significant revision,
- the new normal data seems to still have a wobble, and analyzing too small of a period can lead you to the wrong conclusion,
- the previous month(s) have been revised – do you compare where you thought you were using last month’s reference point, or use the revised data?
Anyway, I thought it would be interesting to view where the average consumer was at the beginning of the year. For the vast majority of the population, the cost of home ownership or renting changed little this year. But viewing the graph below using the perspective of where we were standing at the beginning of the year, it seems in general most are better off now than they were on New Years 2013.
Indexed to January 2012 – Income (thick blue line), gasoline (red line), and the consumer price index (green line)
The above graph uses data from three different governmental agencies. As a check, the graph below uses only data from the BEA (Bureau of Economic Analysis) which shows that the average consumer has a tiny fraction more money after spending then they did at the beginning of the year.
