July 19, 2019 – “Real consumer spending has held up so far this year even as consumers were less confident about future economic conditions, said Michael Brown, Principal U.S. Economist. “Modest consumer spending should continue given the current economic fundamentals such as employment growth and wage gains.” Retail sales growth rebounded to 3.3 percent year-over-year (YoY) in June, consistent with the stronger-than-expected job growth for the month. “The job market is still strong and declining inflation should increase consumer purchasing power,” said Eric Warner, U.S. Economist. “However, a large drop in confidence, especially among older Americans, suggests that consumers remain cautious.”
Other highlights of this report:
- A comparison of retail sales and nominal personal spending, a broader measure of spending, shows that consumer spending remained solid this quarter, supported by auto sales and spending on services.
- Last year’s tax cuts provided a lift to disposable personal income so some lower YoY readings this year are to be expected. However, after accounting for last year’s base effects, disposable income growth has been softer even with benign inflation readings.
- The Consumer Confidence Index fell in June to 121.5, from 131.1 in May, as confidence in both current and future economic conditions declined. Confidence among nearly all age and income groups dropped, with the largest declines in confidence among middle income earners and consumers over the age of 55.