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Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights consumer spending.
- Consumer spending expanded nicely in July, thereby squashing talk of a second recession.
- Consumer spending grew by 0.8% over one month to July, matching the highest monthly pace in 2 years, and is higher by 5.1% compared to one year ago.
- Part of the increase was due to higher prices caused by general inflation, but even after accounting for that, real consumer spending expanded at a nice clip. This nearly assures that GDP growth in the third quarter could approach 2%, better than the lackluster 0.4% growth in the first quarter and 1.0% in the second quarter. Still, the GDP needs to grow by 4% or better to meaningfully push unemployment lower.
- Spending grew nicely, but not income. Personal income of everyone combined grew by 0.3%. Therefore, the savings rate declined modestly to 5.0% in July from 5.5% in June.
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