The United States: The slowing trend of personal consumption growth
2024-05-30
■ The May US Consumer Confidence Index indicates that households are increasingly concerned about stagflation
■ The United States is about to enter the summer vacation, and the free-spending direction will be the touchstone for confirming individual consumption vitality.
Personal consumption has grown significantly since last year's end in the United States. Still, the growth rate has gradually slowed since the beginning of the year, with some indicators indicating an unstable consumer mentality.
The May Consumer Confidence Index (102.0) released by the US Conference Board yesterday rose for the first time in four months from April, rebounding from the low level in April. Segmented data shows that consumers' optimism about current and future business conditions has decreased, but their outlook on the labor market and household financial situation has improved. However, in other survey items not included in the Consumer Confidence Index, the expected inflation rate (5.4%) and expected interest rate increase rate (56.2%) for the next year have increased, leading to a deterioration in the current and future financial situation of households. In addition, the expected response rate (69% * 1) for the possibility of an economic recession in the next year has also increased, indicating that consumer concerns about stagflation are intensifying.
Other published relevant indicators have also shown similar trends. The University of Michigan Consumer Confidence Index (69.1), another key indicator of consumer sentiment, sharply declined in May, with the Status Quo Index and the Expectation Index experiencing significant declines. This index provides a forward-looking view of consumer expectations. As part of the Consumer Expectations Survey (SCE) conducted by the New York Federal Reserve, a four-month SCE household expenditure survey showed that the latest April survey showed nominal household expenditure (a year-on-year increase of 4.6%) lower than the April 2021 survey. The proportion of households spending large amounts (such as housing, cars, furniture, appliances, etc.) (53.8%) also dropped to the lowest level since the April 2020 survey. However, the expected growth rate (median) of spending for the next year has increased compared to the December survey for essential goods (4.6%) and non-essential expenses (2.3%), indicating that consumption will not sharply decline.
After War Memorial Day (May 27th), the United States enters the summer vacation season, which usually ends on Labor Day in September. This season is significant as it often sees an increase in demand for leisure consumption, which can influence consumer spending patterns. According to data from the US Energy Intelligence Agency (EIA), the retail price of gasoline in the United States on the eve of War Memorial Day (May 20, $3.58 per gallon) has increased since the end of last year. However, after adjusting for inflation, it is still about 2% lower than last year. The current gasoline prices will not seriously constrain driving demand. Still, data such as the consumer confidence index indicate that households are strengthening their lifestyle defense posture and suppressing leisure and other free spending. Therefore, this summer's consumption trend will be the touchstone to confirm household consumption willingness.
■ The United States is about to enter the summer vacation, and the free-spending direction will be the touchstone for confirming individual consumption vitality.
Personal consumption has grown significantly since last year's end in the United States. Still, the growth rate has gradually slowed since the beginning of the year, with some indicators indicating an unstable consumer mentality.
The May Consumer Confidence Index (102.0) released by the US Conference Board yesterday rose for the first time in four months from April, rebounding from the low level in April. Segmented data shows that consumers' optimism about current and future business conditions has decreased, but their outlook on the labor market and household financial situation has improved. However, in other survey items not included in the Consumer Confidence Index, the expected inflation rate (5.4%) and expected interest rate increase rate (56.2%) for the next year have increased, leading to a deterioration in the current and future financial situation of households. In addition, the expected response rate (69% * 1) for the possibility of an economic recession in the next year has also increased, indicating that consumer concerns about stagflation are intensifying.
Other published relevant indicators have also shown similar trends. The University of Michigan Consumer Confidence Index (69.1), another key indicator of consumer sentiment, sharply declined in May, with the Status Quo Index and the Expectation Index experiencing significant declines. This index provides a forward-looking view of consumer expectations. As part of the Consumer Expectations Survey (SCE) conducted by the New York Federal Reserve, a four-month SCE household expenditure survey showed that the latest April survey showed nominal household expenditure (a year-on-year increase of 4.6%) lower than the April 2021 survey. The proportion of households spending large amounts (such as housing, cars, furniture, appliances, etc.) (53.8%) also dropped to the lowest level since the April 2020 survey. However, the expected growth rate (median) of spending for the next year has increased compared to the December survey for essential goods (4.6%) and non-essential expenses (2.3%), indicating that consumption will not sharply decline.
After War Memorial Day (May 27th), the United States enters the summer vacation season, which usually ends on Labor Day in September. This season is significant as it often sees an increase in demand for leisure consumption, which can influence consumer spending patterns. According to data from the US Energy Intelligence Agency (EIA), the retail price of gasoline in the United States on the eve of War Memorial Day (May 20, $3.58 per gallon) has increased since the end of last year. However, after adjusting for inflation, it is still about 2% lower than last year. The current gasoline prices will not seriously constrain driving demand. Still, data such as the consumer confidence index indicate that households are strengthening their lifestyle defense posture and suppressing leisure and other free spending. Therefore, this summer's consumption trend will be the touchstone to confirm household consumption willingness.