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The Consumption Drag: What it Means for Investors
July 02, 2014 at 19:00 PM EDT
The one segment of the U.S. economy that still appears to be lagging is also the biggest: household consumption. In May, personal spending again disappointed, up just 0.2%, versus expectations for a 0.4% increase. Meanwhile, according to revised first-quarter gross domestic product (GDP) numbers released last week, personal consumption rose just 1%, down from the previous estimate of 3.1% growth. Looking forward, household consumption – as distinguished from business spending, which I believe will accelerate – most likely won’t pick- up significantly anytime soon. As I write in my new weekly commentary, there are three reasons why personal spending is likely to remain muted in the foreseeable future. Debt is no longer fueling consumption. Consumers are still struggling to pay down their debts and credit availability is limited. Debt helped power consumption for four consecutive decades and, without it, consumers have relatively shallow pockets. Lower savings aren’t spurring spending. The […] Click here to read the original article on ETFdb.com. Related Posts: No Related Posts
The one segment of the U.S. economy that still appears to be lagging is also the biggest: household consumption. In May, personal spending again disappointed, up just 0.2%, versus expectations for a 0.4% increase. Meanwhile, according to revised first-quarter gross domestic product (GDP) numbers released last week, personal consumption rose just 1%, down from the previous estimate of 3.1% growth. Looking forward, household consumption – as distinguished from business spending, which I believe will accelerate – most likely won’t pick- up significantly anytime soon. As I write in my new weekly commentary, there are three reasons why personal spending is likely to remain muted in the foreseeable future. Debt is no longer fueling consumption. Consumers are still struggling to pay down their debts and credit availability is limited. Debt helped power consumption for four consecutive decades and, without it, consumers have relatively shallow pockets. Lower savings aren’t spurring spending. The […]
