Morgan Newfield: US Consumer Spending Increases
Morgan Newfield: As US consumer spending increases and savings decline, economists say the rate of consumption could lose momentum.
TAIPEI, Taiwan, February 6, 2018 (Newswire.com) - Although U.S. consumer spending increased steadily last month as demand for goods and services rose, economists at Taipei, Taiwan based Morgan Newfield say the increase came at the expense of savings, which fell to their lowest in a decade. Morgan Newfield economists believe this could spell trouble for economic growth and consumption in the future.
Americans were likely more confident due to increasing household budgets after record stock market gains and rising property prices, prompting many to spend their savings. US consumer savings are now at around the same level as they were 10 years ago when the US economy fell into a recession.
A Morgan Newfield economist commented that increased consumer confidence and growing bullishness on the US stock and property markets are improving US citizens’ outlook, with many feeling more optimism than in recent years. He added that Americans will require ongoing growth over the course of this year in order to maintain the pace of consumption.
On Monday, the US Commerce Department reported that consumer spending, which makes up more than 66 percent of the country’s economy, increased 0.4 percent in December following an upwardly revised 0.8 percent increase the month before.
December’s increase was on par with economists’ predictions and consumer spending rose 0.6 percent in November. Last year savings dropped to the lowest level in 10 years.
A Morgan Newfield economist stated that the ongoing decrease in the rate of saving will limit the degree to which consumers can continue to gain momentum.
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Source: Morgan Newfield