All Posts Tagged: consumer spending

U.S. Outlook: Signs Still Point to Slower Growth Ahead

Scott Anderson
Chief Economist

Despite stocks hitting record highs in November, the economic tea leaves continue to indicate slower U.S. and global economic growth in the fourth quarter. The Citi U.S. economic surprise index has been slipping since September 25th.

Positive economic surprises have largely come from only housing and labor market indicators over the past month, while retail positive surprises have faded.

Consumer Are Losing a Tug-of-War

October’s retail sales and industrial production releases revealed the continuing tug-of-war between a relatively resilient U.S. consumer and a manufacturing sector that remains mired in a deepening recession.

The U.S. consumer is increasingly looking tired. Retail sales growth is on a clear downtrend, even though overall it is still a long way from recessionary levels of spending.

Retail spending categories last month show most of the consumers’ additional spending went to gasoline stations, food, and motor vehicles – all necessities for most people. Meanwhile, discretionary retail spending categories like clothing, furniture, sporting goods, and electronics were all noticeably weak.

Crisis of Confidence? 

Moreover, weak real average weekly earnings growth of only 0.9% year-on-year through October, rising initial jobless claims, and a large gap between the University of Michigan Consumer Sentiment Index and the Conference Board’s Consumer Confidence measure, indicate consumer spending could continue to slow in 2020. The headwinds for the consumer are blowing a bit harder today.

Today’s retail sales data is consistent with our forecast for 2.3% real consumer spending growth in the fourth quarter. That is far lower than the 2.9% growth in the third quarter and a sizzling 4.6% growth pace in the second quarter. Our view is the longer manufacturers and the global economy struggle, the more that weakness will spread to the overall U.S. labor market and consumer spending.

For more, see my full U.S. Outlook, delivered on November 15.

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U.S. Outlook: Will Conventional Wisdom Hold? Next Week is Pivotal

Scott Anderson
Chief Economist
A woman posting a help wanted sign.

Conventional wisdom on the strength and resilience of the U.S. expansion will be tested next week. Is the economy really headed for a soft landing?

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U.S. Outlook: Expect Another Fed Rate Cut

Scott Anderson
Chief Economist

The need for another quarter-point Federal Reserve interest rate cut at the end of October continues to increase. In fact, more cuts will likely be needed in the months ahead to stem the tide of slower U.S. and global economic growth.

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U.S. Outlook: Are Consumers About to Feel a Squeeze?

Scott Anderson
Chief Economist

We think it’s about to get harder for consumers in the quarters ahead. For now, they actually still feel pretty good about their current job and financial situation.

Consumer sentiment just hit a three month high in October, according to the University of Michigan Survey. Indeed, U.S. households still have a lot going for them. The U.S. unemployment rate just hit a 50-year low.

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U.S. Outlook: Payrolls report doesn’t provide a clear picture

Scott Anderson
Chief Economist
Two girls working in a factory

There are signs of a cooling labor market in September’s jobs numbers. However, no signs yet of the panic and capitulation typical at the onset of a recession.

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