US Consumer Spending Remains Surprisingly Resilient

Consumers look to still person much spending near successful them, contempt marketplace watchers anticipating a income slowdown successful nan 2nd half of 2024.

Many economists expected U.S. consumers to statesman to return a breather and slow down connected their purchases successful June. But today's unit income study showed spending was unchanged. The Census Bureau besides updated its results for May, moving its income information higher by 20 basis points to now bespeak a 0.3% emergence erstwhile compared pinch nan anterior month.

“Don’t count nan U.S. user retired conscionable yet,” wrote Scott Anderson, BMO Capital Markets main U.S. economist.

Consumers Showing More Life than Predicted

Strong unit income helped nan system perform amended than expected successful 2023 helping dodge a recession. It has kept up a patient gait truthful acold successful 2024, contempt worries that a slowdown was successful shop for nan 2nd half of nan year. 

However, immoderate economists are now asking if consumers are group to support spending. 

“There has been immoderate interest astir nan system and nan user complete nan past fewer months, and while this is conscionable 1 information point, it will thief dispel nan belief that consumers are emotion excessively overmuch heat,” wrote Bret Kenwell,  U.S. finance expert astatine eToro.

Sales person nan imaginable to emergence further arsenic a fluke depressed centrifugal conveyance sales, economists said. 

“Motor conveyance income were apt held backmost artificially past period arsenic a awesome cyber onslaught connected car trader machine systems required income to beryllium recorded manually, introducing lags successful signaling that will beryllium made up successful July,” BMO’s Anderson wrote.

Continued Sales Will Boost Economic Growth

The parts of nan unit income study utilized successful calculating gross home merchandise (GDP), which economists telephone nan power group, came successful moreover stronger, up 0.9% successful June. That measurement strips retired components for illustration centrifugal conveyance sales, gasoline, restaurants and building materials.

That growth, paired pinch a downshift successful inflation, could mean that GDP maturation will beryllium higher than expected, wrote Ben Ayers, elder economist for Nationwide.

Stronger spending is bully for nan economy, and it’s improbable to create excessively galore worries pinch nan Federal Reserve, which is widely expected to trim liking rates astatine its Sept. 18 meeting. 

“Resilient economical maturation allows nan Fed to attraction connected controlling ostentation arsenic they group liking complaint policy,” wrote Bill Adams, Comerica Bank main economist.