Consumers keep at it, spending strong
The American consumer is alive, well and spending freely, another sign recession fears of late are overblown.
Personal spending in July rose 0.6 percent, the best month since April, while personal income was little changed at 0.1 percent.
“Consumers remain in good shape, continuing to push the U.S. economy forward,” said PNC chief economist Gus Faucher in a note. He added, “Although income growth was softer in July, it should pick back up over the next couple of months as it was held back by some one-time factors, including a big drop in interest rates.”
“From a performance point of view, we’re pleased with the strength we see in the business. Customers are responding to the improvements we’re making, the productivity loop is working, and we’re gaining market share” said Walmart CEO Doug McMillon. As a result, the world’s largest retailer boosted its profit outlook for the year.
Over at Target, the sentiment was similar. “Because of our outstanding performance in the first half of the year and our confidence moving forward, we are increasing our guidance for full-year earnings per share,” said Target chairman and CEO Brian Cornell following the company’s latest earnings report.
Consumer spending, which accounts for about 70 percent of the U.S. economy, remains robust, in part due to the strong labor market. The unemployment rate sits at a 50-year low, 3.7 percent and there are roughly about 1 million jobs available and not enough workers to fill them, according to the Bureau of Labor Statistics.
The next update on the U.S. job market will be released Sept. 6 with the August employment report. Economists polled by Refinitiv are forecasting employers added 159 positions as the unemployment rate held steady at 3.7 percent.
Despite strong consumer spending and low unemployment broader economic growth remains at 2 percent based on the last revision of GDP for the second quarter released this week.