Slowing U.S. Consumer Spending
Consumer Confidence
Following a sharp increase in consumer spending in the second quarter, it has decelerated. Consumer spending surged at a 4.6% annualized rate in the second quarter, the fastest pace in 4-1/2 years. Succeeding this, only a 0.1% increase in consumer spending took place in August. This suggests that consumption, the American economy's main driver of growth, is slowing. With consumer confidence having the largest drop in nine months, consumer spending may continue to decelerate. As the trade war with China has endured, high consumer spending (as a result in high employment) has been able to counter some of the hit the economy has taken. If consumer spending follows projected trends of slowing down, what kind of policy can be implemented to counter such an issue?
As a junior looking to enter the job market soon, the downturn in consumer confidence is definitely a huge concern for me; this post was a much needed wake up call.
ReplyDeleteI think we may need to wait and see how the rest of the year plays out. Most consumers do their spending during the "holiday" months. We should compare this data to the previous before making a conclusion.
ReplyDeleteIt is reasonable to assume that consumer confidence in the economy (and thus consumption) will continue to slow as the trade war is prolonged. The longer the trade war continues, the more consumers will become anxious over the looming recession, and this anxiousness will further decrease consumer confidence and consumption in the economy. The decrease in consumption (combined with the prolonged trade war) has the potential to significantly hurt the American economy, so the government needs to take proactive measures to maintain and expand consumer consumption.
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