Can U.S. Economic Growth Speed Up If Wages Keep Stagnating?
Consumers spent more in May than they have in six years, before the financial crisis and Great Recession sent the U.S. economy into a tailspin. Survey data compiled by Gallup show that Americans reported spending an average of $98 per day — $10 more than the April average and well above May’s $90. In order to track consumer spending trends, the research firm measures Americans’ daily self-reported consumer spending at retail stores, gas stations, restaurants, and online, excluding money put toward normal household bills and major purchases such as homes and cars.
By and large, the firm’s data has served as an accurate representation of the recovery of the American consumer, which — like the recovery of the broader U.S. economy — has been hit by a number of setbacks. But while Gallup’s data serve as a broad barometer of the health of the American consumer, it is only a small narrative in a larger, more complex story. The May self-reported spending figure shows consumers gathering confidence in the economic recovery. However, other data — specifically the Department of Commerce’s Personal Income and Outlays report, the first-quarter gross domestic product figure, jobs statistics, and measures of economic confidence — add more nuance to that spending story.
The available data on the health of the U.S. economy, wage growth, job creation, and public sentiment suggest that a number of hurdles stand in the way of a complete recovery.
“Though Americans’ views of the economy on a monthly basis have been flat throughout 2014, the May increase in spending suggests the possibility of some economic improvement,” Gallup’s Justin McCarthy wrote of May’s figure. And as he indicated, the research firm’s economic confidence measure has hardly changed throughout 2014. Measuring minus 15 in the last full week of May, the index recovered from the massive dip it took amid October’s shutdown of the federal government. Yet that is still a poor reading, indicating that few Americans deem the economy to be in good shape or view economic conditions as improving.