Consumer Spending Resilient Even As U.S. Economy Sputters; Key Winners, Losers
Consumer spending accounts for more than two-thirds of U.S. economic activity. But the resilience of the American consumer is being put to the test. Inflation has flared to highs not seen in 40 years, spurring a rapid decline in real wages. Borrowing rates have galloped too. Job numbers have held strong so far but layoff whispers are turning into a chorus.
X
Yet even as U.S. GDP declined slightly in the first two quarters of 2022, inflation-adjusted consumer spending continued to rise, albeit at a sluggish 1% annual rate in Q2. And that’s a good sign for the U.S. economy. While the outlook could change if the job market crumples, consumers’ stamina suggests the U.S. can avoid a serious downturn.
Americans seem to be shifting their spending from goods to services, however. That makes sense, since they spent so much on furniture and electronics during the pandemic when they couldn’t travel or dine out. Changes in spending…
