Recession warnings are looking flat wrong as consumers power the economy forward
Summary
The U.S. economy is growing, largely because people and companies are spending more. Despite earlier predictions of a recession, recent data shows strong growth in consumer spending and overall economic activity.Key Facts
- The U.S. Commerce Department reported a 0.6% rise in personal consumption expenditures in August.
- When adjusted for inflation, this spending increase was 0.4%.
- Spending on both durable (long-lasting) and nondurable (short-term) goods rose by 0.8%.
- Personal income rose by 0.4%, while the savings rate fell, indicating people are spending from their savings.
- The Atlanta Fed's GDPNow model predicts 3.9% GDP growth for the third quarter.
- The revised data showed consumer spending in the second quarter was stronger than initially reported, with a 3.8% growth rate.
- Consumer sentiment has been lower, especially among lower-income groups, and the labor market is slowing down in terms of job creation.
- Higher-income groups are primarily maintaining consumer spending levels.
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