The American Consumer Continues to Prop up a Slowing Economy, but Could be Waning
August 19, 2019
Consumer spending saw a big increase last month, as spending on retail and dining rose 0.7 percent. This is more than twice economists’ prediction of a 0.3 percent increase.
The surprise jump shows that, even as other aspects of the economy slow, Americans continue to spend. As uncertainty around trade and a larger global economic slowdown have diminished business investment and slowed domestic manufacturing, a historically strong job market and moderate wage growth have spurred on consumer spending, which accounts for more than two-thirds of all economic activity.
Americans may be more hesitant to open their wallets in the future though. Consumer sentiment fell to 92.1 in August, down from July’s 98.4, according to the University of Michigan. This marks the survey’s lowest reading since January. An index of how Americans feel about the current health of the economy, as well as their own financial health, fell to a nearly two-year low.