Will Consumer Spending Drag Down Economic Growth?
Personal income increased at a seasonally adjusted annual rate of 0.1 percent in August, according to the U.S. Bureau of Economic Analysis. Real disposable income increased at a SAAR of 0.2 percent, and personal consumption expenditures — a measure of consumer spending — increased at a SAAR of 0.1 percent.
The data came in slightly below expectations. On average, economists were expecting personal income to increase 0.2 percent on the month, spending to increase 0.3 percent, and the PCE index to increase 0.2 percent. The soft data suggest that consumer spending — which accounts for as much as 70 percent of total gross domestic product in the United States — could drag on current-quarter economic growth.
Relatively slow growth in consumer spending, at +2.3 percent, was cited as one reason why real GDP grew at a SAAR of just 1.1 percent in the first quarter. In the second-quarter report, the BEA reported that consumer spending growth slowed to 1.8 percent, agitating concerns of a slowdown.