Consumers remain resilient economic force — as long as they continue to spend
Households continue to do their part to keep the economy growing despite global crosswinds and a stronger dollar that restrained economic activity this summer. Though restrained, consumer spending is strengthening and the drop in energy prices is freeing up cash in consumers’ wallets to spend on big ticket-items and other goods and services. This bodes well for the ever-important upcoming holiday season.
Retail sales have been softer than expected recently, perhaps impacted by increased volatility in financial markets. But the most recent rebound in consumer sentiment suggests consumers are feeling more optimistic about current conditions and have favorable expectations about the near term.
Housing has been a bright spot in the in the economy and continues to be a positive force. Solid job growth, improving consumer confidence and still-low home mortgage rates are all propelling the housing market. This is a good sign since newly purchased homes need to be outfitted with retail products.
Inflation was modestly stronger in September, but it has been difficult to pass on higher prices as consumers remain price sensitive. Most of inflation increases have come in the services sector.
More drama could come this winter if Congress does not move quickly to complete work on the federal budget and debt ceiling. Continued debate would fall in the middle of the holiday season. If the issue amplifies on Capitol Hill, we could see a shift in consumer spending intentions.
Download this month’s report, which includes the following highlights:
- Retail sales and holiday sales forecast
- Job growth
- Consumer prices
- Gross Domestic Product
- Job openings
- Housing market index
- Personal income and spending