How Resilient is the US Consumer?
Next week brings both, with the monthly consumer confidence report on Tuesday and the personal consumption index on Friday. But signs of slowing jobs growth, coupled with reports of rising loan delinquencies, is causing concern among some analysts.
A Reuters poll of economists predicted the Conference Board’s monthly main index of consumer confidence for September will slip to 102.9 from 103.3, leaving it nearer the lower end of its 115-97 range this year. However, wide variations are in the forecasts. Nomura’s team forecast a rise to 104.5.
On Friday investors will be awaiting the personal consumption expenditures price index, known as PCE and the Fed’s preferred measure of inflation. Economists polled by Bloomberg predict a slight rise to 2.7 per cent year-on-year for August for the core measure. Last month’s reading was steady at 2.6 per cent.
Recent readings on consumer spending — both retail sales and PCE — have shown continued growth, said analysts at Citigroup, writing after the central bank’s rate cut on Wednesday, but warning that a drop in the savings rate could be storing up future trouble.
“[That suggests] consumers are still spending. But . . . it also suggests that consumers may be getting stretched,” said the Citi team.
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This is a subscriber only article by Financial Times posted today. For me this concludes that the situation for the consumers in US is just on a sliding ledge. Even a 50 point rate cut would not be a respite for the consumers.
While I'm just a student of Economics and always read and listened that US people are very rich. They have all the luxury and their lifestyle is much costlier than others. But after coming to SN, I think I'm closer to the reality.
So, can you guys please tell me what's the real picture there?