US: Unless confidence is restored, consumer spending in H2 is poised to slow - Wells Fargo


Data released today showed a significant decline in consumer confidence in June. Analysts at Wells Fargo point out that even with this deterioration, confidence is still elevated by historical standards and noted the fallout in June is likely attributable to concern about the trade war and an indication of vulnerability in the labor market.

Key Quotes: 

“Consumer confidence was shaken in June falling almost 10 points to 121.5. The consumer is still on track for a solid outturn in Q2 but unless confidence is restored, consumer spending in the second half is poised to slow.”

“Some retrenchment was expected, but today’s consumer confidence report instead showed that amidst an ongoing trade war and a soft May jobs report, consumers were downright shaken. The 9.8 point drop is the largest monthly decline since 2015. From the initially reported print of  134.1, the decline was 12.6 points, the biggest monthly drop since 2011.”

“The threats about a new front in the trade war with Mexico consumed the news cycle in the first week of June. Although that already feels like history, the second half of the month included more geo-political worries with the downing of a U.S. drone in Iran and fresh sanctions against the Iranians in response. So to the extent that consumers are worried about an unsteady global growth landscape, there are no signs of that abating at present.”

“It would be too soon to mark-down spending estimates for the second half; but if past patterns hold, without a turnaround in this series, job growth could slow in coming months.”

“We are forecasting a 2.9% rate of growth in personal consumption expenditures in the second quarter. Today’s report of wilting confidence in June does not change that. Retail sales have already been released for April and May (two out of the three months for the second quarter) and suggest that barring an awful month for stores in June, spending is already on solid footing for the period.”
 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.

EUR/USD News

GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.

GBP/USD News

USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.

USD/JPY News

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News

Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •