Main Topic: U.S. consumer confidence increases to a two-year high in July, but mixed signals persist.
Key Points:
1. Consumers remain fearful of a recession due to interest rate hikes.
2. Consumers plan to buy motor vehicles and houses, but fewer anticipate purchasing major household appliances.
3. Consumers intend to spend less on discretionary services but expect to increase spending on healthcare and streaming services.
### Summary
Former Toys "R" Us CEO Gerald Storch warned that the economy is likely to face a difficult holiday season due to persistent inflation. Other economic stresses such as rising interest rates, credit card debt, and student loans are also contributing to consumer difficulties.
### Facts
- Inflation remains sticky despite the Inflation Reduction Act that was passed a year ago.
- Sales of physical products have been declining for 11 consecutive months when adjusted for inflation.
- The July consumer price index (CPI) rose 0.2%, with prices climbing 3.2% from the same time last year.
- Pulte Capital CEO Bill Pulte suggests that the economy is in a period of stagflation with low growth and high inflation.
- Shelter costs, accounting for 40% of the core inflation increase, rose 0.4% for the month and are up 7.7% over the past year.
- Americans are spending $709 more per month on everyday goods and services compared to two years ago.
- Consumers are shifting towards value retailers in response to inflation.
- President Biden acknowledges that the Inflation Reduction Act was not solely aimed at reducing inflation but rather focused on generating economic growth.
The U.S. economy continues to grow above-trend, consumer spending remains strong, and the labor market is tight; however, there are concerns about inflation and rising interest rates which could impact the economy and consumer balance sheets, leading to a gradual softening of the labor market.
Fresh signs of stress in U.S. consumer spending are emerging as retailers like Macy's and Foot Locker lower profit forecasts, indicating that middle-income Americans are spending less due to high living costs and existing card debt.
Consumer spending growth is slowing as the economy stabilizes, with consumers prioritizing essential purchases and adjusting their spending habits in response to rising interest rates and financial pressures.
US consumer spending is showing resilience and robust growth, although signs of a slowdown are emerging, potentially related to the public's perception of a deteriorating financial situation due to high inflation and rising interest rates, despite the fact that households still have higher deposits compared to pre-pandemic levels.
Employment growth in the US likely cooled and wage increases moderated in August, reducing the urgency for another interest-rate hike by the Federal Reserve and tempering inflation risks.
The US economy is expected to slow in the coming months due to the Federal Reserve's efforts to combat inflation, which may lead to softer consumer spending and sideways movement in the stock market for the rest of the year, according to experts. Additionally, the resumption of student loan payments in October and the American consumer's credit card debt could further dampen consumer spending. Meanwhile, Germany's economy is facing a recession, with falling output and sticky inflation contributing to its contraction this year, making it the only advanced economy to shrink.
Australian retail sales rebounded in July, but the annual rate slowed, indicating that high borrowing costs are slowing consumer spending and not affecting the outlook for interest rates.
Consumer confidence in the US fell in August due to concerns about inflation, reversing the optimism from the past two months, according to The Conference Board's Consumer Confidence Index.
The number of job vacancies in the US dropped in July, indicating a cooling labor market that could alleviate inflation, while fewer Americans quit their jobs and consumer confidence in the economy decreased, potentially impacting consumer spending; these trends may lead the Federal Reserve to delay a rate hike in September.
The US jobs data for July suggests a cooling employment market, with a drop in labor demand and easing of hiring conditions, which could help lower inflation without a significant rise in unemployment rates.
Consumer spending in China rebounded in August, with all categories, including apparel, automotive, food, furniture, appliances, and luxury, experiencing increased sales compared to July, according to a survey by the China Beige Book. Retail sales in July rose by 2.5% year-on-year, raising concerns about China's economic growth, but the August survey showed a surge in spending, particularly in the services sector, which saw continued strength in travel and hospitality. Additionally, corporate borrowing increased as the cost of capital declined, indicating a boost in business activity. However, China's property sector continued to worsen, with house prices barely growing and home sales declining.
US consumer spending increased by the most in six months in July, driven by strong demand for goods and services, but slowing inflation rates suggest that the Federal Reserve will keep interest rates unchanged next month.
Consumer spending in the US jumped 0.8% in July, the strongest monthly gain since January, driven by purchases of restaurants, live shows, toys, games, and recreational equipment; however, underlying data suggests that this spending may be on borrowed time.
British factories in August experienced their weakest month since the start of the COVID-19 crisis due to shrinking orders caused by rising interest rates, according to a survey, resulting in a decline in purchasing activity, inventory holdings, and staffing levels. However, the slowdown in domestic and export demand has alleviated inflation pressures, potentially leading to a decrease in goods price inflation. With the economy showing signs of a slowdown, the Bank of England is expected to raise rates for the 15th consecutive time, despite concerns that it may lead to a recession.
The latest inflation data suggests that price increases are cooling down, increasing the likelihood that the Federal Reserve will keep interest rates unchanged in their upcoming meeting.
U.S. consumer spending increased in July, boosting the economy and reducing recession risks, but the pace is likely unsustainable as households dip into their savings and face potential challenges from student debt repayments and higher borrowing costs.
The US job market is cooling down, with signs of weakening and a slowdown in momentum, which may allow the Federal Reserve to ease inflation pressure through weaker job creation and reduced demand.
The US economy grew modestly in July and August, with signs of consumers relying more on borrowing to support spending after depleting their savings, while inflation slowed due to decreasing price pressures in the goods sector, according to the Federal Reserve's Beige Book report.
Despite the cooling inflation rate, the cost of goods and services in the United States has significantly increased, making it more expensive for the majority of workers to live, which contributes to their unhappiness about the economy.
Economists predict that inflation will cool without a recession, as the effects of rate hikes have already taken shape, putting the US economy on track for a soft landing.
China's consumer prices rose slightly and the decline in factory-gate prices slowed in August, indicating easing deflation pressures and signs of stabilization in the economy, although more policy support is needed to boost consumer demand.
Consumer spending has remained resilient, preventing the US economy from entering a recession, and this trend will likely continue due to low household debt-to-income levels.
The US consumer is predicted to experience a decline in personal consumption in early 2024, which could lead to a potential recession and downside for stocks, as high borrowing costs and dwindling Covid-era savings impact household budgets.
U.S. consumer prices are expected to have increased the most in 14 months in August due to rising gasoline costs, while underlying inflation is forecasted to remain moderate, potentially prompting the Federal Reserve to keep interest rates steady.
Consumer spending in the US has supported the economy despite concerns of a recession, but rising interest rates, the resumption of student loan payments, and dwindling savings are predicted to put pressure on consumers and potentially lead to a shrinking of personal consumption.
Despite claims by the Biden administration and corporate media that inflation is decreasing, the latest consumer price index from the Bureau of Labor Statistics shows that Americans paid 3.7 percent more for basic consumer items in August compared to the previous year.
Inflation in the Phoenix area has cooled down to 3.7% over the past 12 months, no longer ranking as one of the highest inflationary hotspots in the US, as the housing market has slowed down and the Federal Reserve's interest-rate increases have taken effect.
Retail sales in the US remained resilient in August, with a 0.6% month-on-month increase, surpassing expectations of 0.2%, indicating a positive trend for the economy.
U.S. retail sales rose more than expected in August due to higher gasoline prices, but underlying spending on goods slowed as Americans faced increased inflation and borrowing costs, while the trend in underlying spending on goods was not as robust as initially thought in July. Despite this, overall consumer spending is expected to remain strong, driven by spending on services.
The US economy shows signs of weakness despite pockets of strength, with inflation still above the Fed's 2% target and consumer spending facing challenges ahead, such as the restart of student loan payments and the drain on savings from the pandemic.
Consumer sentiment in the US fell for the second month in a row in September, reflecting concerns about the economy, even though Americans believe that inflation will continue to slow.
Consumer confidence in the US dropped in September, signaling a growing concern among Americans that the economy might be heading towards a recession, as inflation, rising interest rates, and recession fears continue to impact consumers.
The current state of the consumer is concerning as wages are not keeping up with inflation, excess savings from the pandemic have been depleted, and increasing levels of credit card debt are making it difficult to maintain spending levels, leading to potential economic headwinds.
The strength of the US consumer, which has been propping up the economy, is starting to crack due to factors such as student loan payments, soaring gas prices, rising insurance premiums, dwindling personal savings, and potential disruptions like the United Auto Workers strike and a potential government shutdown, raising concerns about a possible recession.
Consumer spending remains resilient despite inflation and rising prices, contributing to economic growth, while the risk of a recession in the US has decreased but not disappeared completely.
The U.S. economy is experiencing turbulence, as inflation rates rise and U.S. Treasuries lose value, leading to concerns about whether Bitcoin and risk-on assets will be negatively impacted by higher interest rates and a cooling monetary policy.
Consumer spending in the US increased by 0.4% in August, while core inflation fell below 4.0% for the first time in over two years, potentially reducing the likelihood of an interest rate hike by the Federal Reserve.
The US consumer is showing signs of strain due to rising gas prices, high credit card delinquency rates, and the impending restart of student loan payments, leading to concerns about weaker consumer spending and potential credit trouble for heavily indebted companies.
The summer's positive economic indicators, such as lower inflation and strong job numbers, have led to optimism that the US will avoid a recession, but factors such as a potential auto strike, the resumption of student-loan repayments, and a government shutdown could contribute to a downturn. The combined impact of these factors, along with others like higher interest rates and oil prices, suggests that a recession may be looming.
Consumer spending in Minnesota is slowing down as the economy stabilizes after the COVID-19 pandemic, with a shift from goods to services, and rising prices for essential items like housing and gas impacting consumer behavior.
The upcoming Consumer Price Index (CPI) report for September is expected to show cooling core inflation despite a rise in headline inflation, with the Federal Reserve closely monitoring the data to assess whether inflation is moving closer to its 2% annual goal.
The U.S. government's upcoming inflation report is expected to show a cooling off of inflation, with overall prices for consumers rising by 0.2% compared to August and 3.6% compared to a year ago, and core inflation expected to be up 4.1% from September last year, indicating slower price increases in September than in August.
The upcoming monthly inflation report is expected to show that inflation in the US is cooling off, with overall prices for consumers rising by 0.2% compared to August and 3.6% compared to a year ago, indicating slower price increases in September than in August. However, if the report reveals that inflation remained higher than expected, especially in core areas, it may prompt the Federal Reserve to raise interest rates again, further slowing the economy.