Many economists fear that a recession may be on the horizon. The Dow Jones has been volatile, the ongoing trade war with China has created uncertainty, and business investment has slowed. But at the same time, Americans are still spending on consumer goods. Last month, spending on retail and dining rose 0.7 percent, according to The Hill. This is much higher than the projected 0.3 percent growth expected. Though many economists feel that a slowdown is inevitable, consumer spending is a positive sign that the country’s economy is still strong.
Here are five facts on the resilient American consumer:
1. Consumer spending is responsible for more than two-thirdsof the American economy, according to Fox News. Consumer spending can be broken down into spending on necessities (food, shelter, etc.) and discretionary (entertainment, recreation, etc.). Because consumers in the U.S. continue to spend money, it indicates they are in a financial position to do so.
2. While consumption in the U.S. continues to be strong, consumer confidence across the globe appears to be waning. Consumer spending in Canada had fallen to its lowest levels in a decade. In France, consumer spending dropped despite recent tax cuts. Ireland is reporting lower consumer spending this year than last, as is Poland.
3. In the U.S., major trends in consumer spending include car sales dropping and online purchases increasing. According to CNBC, new vehicle sales in California, the country’s largest auto market, dropped 5.6 percent in the first half of the year. Spending on gasoline, building materials, and food services have also dropped. In contrast, online and mail-order retail sales increased almost 3 percent last month alone.
4. However, data shows that consumer confidence in the U.S. is falling.CBS reports that this drop is likely due to the ongoing trade war with China and concerns that goods will begin costing more. Despite this dip, it’s important to note that confidence remains above the long-term average.
5. Construction is also waning. Homebuilding fell again in July, the third month in a row according to Reuters. Even though there is great demand for buying lower-priced homes, there is not enough land or labor to meet demand. Here, lower interest rates have not seemed to stimulate the market yet.
