Culture of Consumption: The Biggest Part of The American Economy

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The Fed’s preferred underlying inflation measure, the personal consumption expenditures price index excluding food and energy, rose at a 2.2% annual pace in the quarter, about in line with policy makers’ 2% objective.
On a year-over-year basis, GDP increased 2% during the quarter, the weakest pace of Trump’s presidency and putting his goal of 3% annual growth further out of reach for the full year, following 2.5% in 2018.

Still Spending

U.S. consumers saved the day again, offsetting business weakness

Source: U.S. Commerce Department

Note: Figures show contributions to percent change in real GDP

The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise. For businesses, nonresidential fixed investment fell the most since late 2015.

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What Bloomberg’s Economists Say

“The most important question lingering over the growth outlook for the next few quarters is whether consumers will be able to adequately shoulder the burden, as business investment and exports languish in response to economic uncertainty, trade tensions and dollar strength. As of the third quarter, consumers were holding up adequately; this is not surprising to Bloomberg Economics, given the resilience of consumer attitudes and relative health of the labor market.”

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"As the longest U.S. expansion on record shows more signs of cooling, in part because of the fading effects of the 2018 fiscal stimulus, different parts of the world’s largest economy are giving mixed signals.
The unemployment rate has fallen to a half-century low, underpinning consumers and keeping sentiment readings near historical highs. Today’s report showed disposable incomes after inflation increased an annualized 2.9% after a 2.4% pace in the prior quarter.

On the flip side, manufacturing, which makes up 11% of the economy, has weakened further as a widely watched private gauge hit a 10-year low. Companies, including oil and gas exploration firms, have reined in capital outlays to preserve shareholder value.

The weakness in business investment was led by structures and equipment, which both dropped the most in more than three years. Structures contracted at a 15.3% rate, shaving nearly a half a percentage point from growth, driven by a decrease in oil and gas exploration. Computers and aircraft led the decrease for equipment.
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economics                     

U.S. Economy Holds Up With 1.9% Growth on Consumer Strength

By

Jeff Kearns , ‎October‎ ‎30‎, ‎2019‎ ‎5‎:‎30‎ ‎AM    

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  Third-quarter expansion beats estimates for slowdown to 1.6%
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  Consumer spending tops forecasts and remains key growth driver