PYMNTS-MonitorEdge-May-2024

Consumers Still Carrying US Economic Growth

In the United States, the consumer seems poised to keep on spending — carrying economic growth higher in the process, for at least the next few months.

Data released Wednesday from the Commerce Department showed that personal consumption rose 0.3 percent sequentially, continuing gains in that metric, even while September data grew by 0.7 percent (up 20 basis points from prior estimates) over August. The Wall Street Journal noted that that jump was the second highest monthly gain in two years.

The implication from the spending data seems to be that the consumer is poised to keep … consuming. The personal consumption data is broad enough to encompass all sorts if expenditures, from utilities to impulse buys to health care. And as the WSJ noted, some pricing data shows robust demand for even the biggest of big-ticket items (like houses). Income data is also encouraging, as they are up 0.6 percent for the month, and unemployment remains low.

All of this augers well for continued consumer spending, which has been estimated to drive roughly two-thirds of the economy (read: GDP). Broader than a monthly snapshot, the third quarter’s overall growth is at 3.2 percent, the best showing in two years. Meanwhile, the inflation gauge is up 1.4 percent from last year, with a long road toward the 2 percent Fed target level.

PYMNTS-MonitorEdge-May-2024