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.
Despite optimistic economic data and the belief that a recession has been avoided, some economists and analysts believe that a recession is still on the horizon due to factors such as the impact of interest rate hikes and lagged effects of inflation and tighter lending standards.
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.
Americans' attitudes toward the US economy are becoming more tentative as consumer sentiment remains steady, reflecting divergent views on the economy's improvements and concerns about inflation, with inflation expectations remaining higher than pre-pandemic levels.
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.
The US economy grew at a slower pace in the second quarter, but still showed more strength than expected, with GDP revised down to 2.1% from an initial 2.4%; however, forecasts indicate a robust reading in the third quarter of 2.5% or higher, despite concerns of a potential recession.
Consumer confidence is dropping despite a strong economy, leading to questions about the factors influencing sentiment.
Americans are experiencing a "vibecession" as consumer sentiment remains low despite a healthy market, but the link between sentiment and economic indicators has been severed since the COVID-19 pandemic, making predictions inaccurate.
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.
There are indications that a severe economic contraction may be approaching in the US, with a significant decline in home sales and rising interest rates, similar to the 2008 financial crisis, according to Bloomberg analyst Mike McGlone.
Consumer spending in the US is showing signs of cooling, with retail sales expected to slow down in August, indicating that the resilience of the consumer may be waning due to increased borrowing, depleted savings, and the impact of inflation.
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.
US home sales are expected to experience the largest slowdown since 2011, with Fannie Mae forecasting a decline in sales due to higher mortgage rates and a weakening US economy.
The Canadian economy has entered a long-delayed recession due to highly indebted households, overvalued home prices, and a slowdown in consumer spending, with the recession expected to last until the first quarter of 2024 and result in a 1.5% decline in GDP and an increase in the unemployment rate to 7.2%.
The US economy experienced a slowdown in August due to a decrease in industrial activity, according to data from the Federal Reserve Bank of Chicago.
The U.S. economy grew at a solid pace of 2.1% in the second quarter, but consumer spending was weaker than previously reported, although recent evidence suggests a rebound in consumer spending and GDP is expected to rise in the third quarter.
Bill Ackman warns that the U.S. economy is slowing down due to aggressive rate hikes and high real interest rates, which could lead to a challenging period for investors in the commercial real estate market.
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 likelihood of the US avoiding a recession has decreased, as two factors, including a surge in interest rates and the potential for resurgent inflation, could push the economy into a downturn, says economist Mohamed El-Erian.
The U.S. economy is showing mixed indicators, with rising interest rates, high inflation, and increased consumer spending, leading economists to question whether a recession is on the horizon.
Economists are predicting that the U.S. economy is less likely to experience a recession in the next year, with the likelihood dropping below 50% for the first time since last year, thanks to factors such as falling inflation, the Federal Reserve halting interest rate hikes, and a strong labor market.
Consumers are showing signs of slowing down their spending, with growth rates dropping and lower-income households depleting their savings, signaling a low growth, low inflation economy, according to Bank of America CEO Brian Moynihan. Despite the Fed's efforts to tackle inflation, economists remain cautious about the future economic uncertainty.
