US: Consumer set to underpin recovery - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, notes that the USA Conference Board Consumer confidence rose to a new peak since 2007 and the rise has been led by current conditions. 

Key Quotes

“The outlook has lagged, but still rose to a high since mid-2015.  Perhaps optimism for the future has been dragged back by Brexit and the US election and can catch-up to current conditions and fuel stronger economic activity in coming months.”

“The rise in the Conference Board measure follows a higher than expected rise in the University of Michigan sentiment indicator, and may even portend further gains in the UoM survey.”

“The difference between the surveyed “jobs-plentiful” and “jobs hard to get” dipped back to near its low for the year, suggesting that the labor market may have tightened since the first have of the year.”

“The strength in consumer confidence bodes well for consumption to help sustain GDP growth.  GDP was revised up to a strong 3.2% q/q saar in Q3, after 1.4% in Q2.  The annual growth rate rose from 1.3%y/y in Q2 to 1.6%y/y in Q2.”

“Personal consumption rose by a healthy 2.8%q/q saar in Q3 after surging 4.3% in Q2.  Consumption has been the mainstay of growth over the last year.”

“Business investment has been relatively weak over the last two years, detracting from growth in the first half of this year and adding little in Q3.  Residential investment has also declined in the last two-quarters.  These components of growth might be expected to recover over the year ahead.”

“The October retail sales data suggest that Q4 began on a strong footing, showing a re-acceleration in the last two months after a pause in July/Aug, up 4.3%y/y in October.  Anecdotes from traditional post-Thanksgiving sales suggest retailing remained robust in November.”

“The Atlanta Fed GDPNow forecasting model based on the most up to date economic indicators is projecting another strong 3.6% q/q saar expansion in Q4.”