USA: Lower incomes to affect consumer spending

America’s GDP increased 2.5 per cent in the fourth quarter of 2017 according to the second estimate released by the Bureau of Economic Analysis.

Unemployment rate remained unchanged in February at 4.1 per cent. The job market continued to be active in construction, manufacturing and retail trade, according to the US Bureau of Labor Statistics.

Consumer confidence rose in March and reached its highest level since 2004 according to the University of Michigan Surveys of Consumers report. Gains were observed among households with incomes in the bottom third, while the economic assessments of those with incomes in the top third posted a significant monthly decline.

While the federal tax reform legislation was largely perceived as positive, the new import duties on steel and aluminium were spontaneously cited as unfavourable by many consumers.

Consumers’ income expectations fell in March, especially among the top three tiers of income households. Since these households account for more than half of all consumption, consumer spending may not grow in the coming quarter.

 

Source: ITTO