Projecting a Consumer Spending Rebound
The Wall Street Journal last week reported a bright outlook for consumer spending in the months ahead. They could have read it here first: Back in April, the American Institute for Economic Research projected that a consumer spending rebound was on its way.
In the story published on Thursday, the Journal polled 66 economists, with the average projecting household spending will increase by 2.7 percent during the second quarter, and more than 3 percent during the second half of the year, outpacing the winter’s rate of 1.8 percent.
The economists said strength in the labor market will help sustain higher levels of spending.
In our April edition of Business Conditions Monthly, our research staff noted the lackluster GDP performance during the first three months of the year.
“However, gains in jobs, income, and wealth over the past year have helped push U.S. consumer sentiment higher. Should the historical relationship between consumer sentiment and spending hold, we would expect to see a rebound in purchasing over the next several months. This would support our view that the economy’s current weakness is temporary and that growth is likely to reaccelerate in the second quarter.”