Discovering No Spending:
In the past, consumer spending was 70% of the US economy. In the past, an increase in consumer confidence has led to an increase in consumer spending. We have seen global increases in consumer confidence including today’s UK numbers. US consumer confidence has risen from a low of 25.3 in February to 53.1 in September. However, retail sales are still lagging and are expected to be down 2.0% in September.
According to the Discover US Spending Monitor, US consumers are still worried about their personal finances and are limiting their spending plans. The survey showed 19% expect to spend more in the next 30 days, down one point from August; 54% said they planned on spending the same amount, up two points according to Dow Jones. “There appears to be no indication consumers are willing to increase their spending, despite a Monitor-high number of them who feel the economy is getting better,” said Julie Loeger, senior vice president of brand and product development for Discover.”
This is why predictions of holiday spending are for either flat to a meager 1.0% increase. This is also why predictions for Q4 growth are tepid and lower than Q3. This also explains why Federal Reserve members give speeches that are consistently dovish and consistently say they will stay on hold for a long time.
Tags: consumer confidence, Federal Reserve, Retail sales, US Economy