To date, job cutbacks have been centered in industries related to residential construction and manufacturing, with no indication – either from the monthly labor market reports or the weekly unemployment insurance data – of widening weakness. In addition, the incoming information on consumer spending has been consistent with a moderate pace of demand.
The steady labor market has been generating income; and despite the ups and downs in energy prices, real disposable income has been trending up at about a 2-3/4 percent rate since early 2006. In addition, household credit quality remains generally favorable. As is the case for prime mortgages, delinquency rates on consumer loans are low.