Consumer spending in the US is slowing down according to a report released by the Commerce Department on Friday.
The report outlines how consumer spending barely increased in August, while business investment has remained low as trade tensions continue to persist.
The Commerce Department’s report doesn’t paint an amazing picture of the state of the US economy, but it doesn’t signal any coming disasters either. The report doesn’t stoke fears of a recession, as strong income growth and and an unemployment rate sitting at a 50-year low have created a large savings buffer while giving consumers some more spending power.
Unfortunately, the report’s data also shows underlying inflation going up by the most the economy’s seen in seven months (on an annual basis) for August. Economists worry that this could leave the Federal Reserve in a precarious position. The Fed is currently under pressure to maintain the longest economic expansion in recorded US history, which has been continuing for its 11th year in a row. The Fed cut interest rates for the second time this year last week over concerns about slowing global economic growth and the now 15-month long trade war between the US and China.
Amid all of this news, consumer spending was up 0.1% in August. Consumer spending accounts for approximately two-thirds of American economic activity. August saw consumer spending on recreational products and vehicles go up, but this was offset by substantially lower spending at restaurants and hotels. However, the 0.1% consumer spending growth in August fell short of expectations overall.