The US consumer, which represents a bigger share of global GDP than China’s economy, has been the main driver of US GDP growth in recent quarters.
Spurred by job and wage growth, consumer spending has been robust. And from a top-down perspective, there are few signs that this is about to change. However, some underlying factors suggest that weaknesses in US consumer spending are starting to appear. As my colleague Rikkert Scholten has pointed out, the average work week for production workers has declined to its lowest level in more than eight years. With a tight labour market, companies will – where possible – refrain from letting people go, but opt for shorter hours when business slows.
Another off-the-radar development is the rising competition faced by brick-and-mortar retailers from online retailers. This could lead to an increase in shop closings, especially after the holidays. In any case, while overall consumer data still looks upbeat, which was confirmed by the upward revision in consumer spending in the latest US GDP report, it’s worth keeping an eye on the underlying trends as well.
