Consumer Spending is Slowing in August
On Friday, the Commerce Department released the personal-consumption expenditures, or household spending, which slightly raised a seasonally adjusted 0.1% in August from July. Until this point spending has risen an average of 0.5% a month.
Weaker August spending numbers show that consumers might be feeling the pressures that have shaken businesses and manufacturers for months.
“The domestic economy is not immune to all these headwinds,” said Lydia Boussour, U.S. economist at Oxford Economics. “The economy is gradually cooling.”
Consumer spending has been the lead momentum behind the U.S. economy, accounting for more than 2/3 of total economic output. Additionally, orders for long-lasting equipment and machinery, fell 0.2% last month from July and 1.7% from August 2018.
Economists lowered their estimates of third-quarter economic growth in the wake of Friday’s data.
- Macroeconomic Advisers’ model for GDP showed growth slowing to 1.6% in the third quarter, down from a previous estimate of 2.2%.
- Pantheon Macroeconomics, meanwhile, cut its forecast for third-quarter consumer-spending growth to 2.9% from 3.6%.
“Furnishings and household durables are something that consumers tend to spend on when they feel relatively confident,” said Sonia Meskin, a senior economist at Standard Chartered.
The slow in growth has concerned some small business owners like Ann Wingrove, president of Frankfort, Ky. based gift shop Completely Kentucky.
“I’m heavily staffed now so I am very concerned if our sales drop, I will have to lay people off,” she said.