America’s Consumer Expenditure Growth is Slowing Down
A recent report released by the Commerce Department reveals a slowdown in consumer spending in the United States.
The report points out that consumer spending saw only a marginal rise in August, while business investments continue to remain sluggish due to ongoing trade tensions.
Although the Commerce Department’s report doesn’t present a rosy picture of the US economy, it doesn’t indicate any imminent economic crises either. The report doesn’t raise concerns of a recession because strong income growth and remarkably low unemployment rates have led to significant savings and increased consumer purchasing power.
However, the report also highlights that underlying inflation has spiked the most in the last seven months for the month of August. Economists are wary that this situation might put the Federal Reserve in a challenging position. The Federal Reserve is currently facing pressure to sustain the longest economic boom in US history, now entering its 11th consecutive year. The Fed recently lowered interest rates for the second time this year due to concerns over the deceleration in global economic growth and the prolonged trade conflict between the US and China.
Despite these circumstances, consumer spending marginally increased by 0.1% in August. Consumer spending constitutes nearly two-thirds of the US economic activities. In August, spending on recreational goods and vehicles went up, but this was counterbalanced by a notable decline in spending at eateries and hotels. However, the modest 0.1% rise in consumer spending for August fell short of the general expectations.