US consumer spending slows in August, while incomes rise
U.S consumer spending barely rose in August suggesting that economic growth is the U.S. may be slowing down, but what's interesting is that income arose during August. Consumer spending makes up more than two-thirds of economic activity and it only increased 0.1% in August, while personal income rose 0.4%. According to the Commerce Department an "increase in outlays on recreational goods and motor vehicles was offset by a decrease in spending at restaurants and hotels." This 0.1% increase in consumer spending was no match compared to the previous ongoing growth of consumer spending in prior months to August showing that economic growth could possibly be slowing down. Another reason why consumer spending could still continue to slow down is because of the ongoing trade war with China, which is causing the price of most consumer goods that we import in the U.S. to increase.
This article brings up an interesting point in how "the economy’s main growth engine", which is consumer spending has slowed down. It will be important to see what's going to happen in the fourth quarter of the fiscal year where consumer spending tends to be the busiest. I definitely am wondering if factors such as the trade war will slow that down at all compared to past years as well as this year.
ReplyDeleteIf consumer spending which is the biggest component is barely increasing then I'm wondering how other components of GDP such as investment is reacting to this.
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