Recent profit reports from companies such as Amazon, Walmart, and Home Depot, along with other consumer statistics, indicate that the case for a 2023 recession is weakening, as the consumer economy shows resilience with rising real incomes, substantial savings, and continued spending in sectors like automobiles and services.
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.
The United States' pandemic-induced stimulus measures have led to the printing of nearly 80% of all dollars in circulation since 2020, resulting in severe detrimental effects on the economy, including surging prices and inflation.
China's rebound from zero-covid restrictions has resulted in weak growth and deflation, with the lack of consumer spending becoming a major concern for policymakers.
The rate of people quitting their jobs has returned to pre-pandemic levels, indicating a decline in workers' advantage and a cooling labor market influenced by the Federal Reserve's interest rate hikes, which have led to worsening job prospects and decreased consumer confidence.
Consumer spending is driving third-quarter GDP growth, but unsustainable spending habits, tightening lending standards, and the depletion of pandemic savings may lead to a decline in consumer spending in early 2024.
The UK economy recovered to pre-pandemic levels in the fourth quarter of 2021, earlier than previously thought, with GDP growth revised up by 0.9 percentage points to an 8.5% increase in 2021, according to the Office for National Statistics.
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 U.S. is experiencing a steady increase in COVID-19 cases and hospitalizations as it enters the Labor Day weekend, with new hospital admissions expected to continue rising, according to the latest data from the Centers for Disease Control and Prevention (CDC).
China's economy is facing a "new new normal" due to a declining population and weak confidence in its post-Covid recovery, prompting calls for systemic reforms to revive growth. The country's aging and shrinking population poses challenges to productivity, consumption, and long-term growth potential, leading major investment banks to cut growth forecasts. Policy adviser Cai Fang suggests relaxing population controls and focusing on expanding consumption as strategies to boost economic growth.
US household savings accumulated during the pandemic are expected to be depleted by the end of September 2023, as the excess savings have steadily declined and are projected to continue falling at a rate of $100 billion per month, potentially impacting consumer spending and the wider economy.
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. consumers have accumulated $43 billion in additional credit card debt during Q2 2022, three times the average amount since the Great Recession, and credit card interest rates have soared to over 20%, raising concerns about the impact of inflation and rising interest rates on consumers' ability to pay off their balances. However, some economists argue that higher wages are helping consumers keep pace with their debt, and the overall rate of charge-offs remains low. Nonetheless, the combination of spent-down pandemic savings and the resumption of federal student loan payments could pose challenges for lower-income borrowers and hinder consumer spending.
China's economy requires three more years and increased fiscal spending to recover from the effects of the COVID-19 pandemic, according to think tank researcher Zhang Yansheng.
