The US consumers have kept showing resilience in recent years, despite many economic headwinds, with the coronavirus lockdowns first, followed by surging prices and then the FED raising interest rates to extreme levels. They continue to hold afloat the U.S. economy, and their ability to keep spending keeps proving wrong economists. During the pandemic, after a short recession that was quite deep due to lockdowns, US consumers splurged on major goods, such as home appliances, etc. That was followed by “revenge spending” for experiences that were prohibited during lockdowns, such as traveling inland and abroad, going to concerts, etc.

Although this year we are seeing signs that the consumer is slowing down. They are spending more cautiously, as the savings keep eroding from surging consumer prices. The resumption of student loan payments in October is also having negative effects on consumer spending. Recent reports from retailers suggest that preferences are changing to spending more on basic needs rather than for fun.

The PCE price index report showed that personal spending increased by +0.8% against +0.7% expected, up from +0.5% in June, indicating that the consumer is keeping up the spending. However, the CB consumer confidence report for this month missed expectations and showed a dip from the previous month, which shows a slowdown in overall spending. July was also revised lower. This, as well as the slowdown in US JOLTS job openings numbers which were released a while ago, are sending the USD lower, as expectations for the FED remaining hawkish decline.

US Consumer Confidence from the Conference Board

• August consumer confidence 106.1 points vs 116.0 expected points
• The July reading at 117.0 was the highest since July 2021

Details:

• Present situation index 144.8 points vs 160.0 prior
• Expectations index 80.2 points vs 88.3 prior
• 1 year Inflation % vs 5.7% prior
• Jobs hard-to-get vs 9.7 prior