Wednesday, August 2, 2017

Consumption Bubble Within Consumption-Driven Economy Still Inflating

News
The U.S. economy accelerated in the second quarter due to an unexpected resurgence of consumer spending. Consumer spending which grew at a 2.8 percent rate accounts for nearly 70% of total US economic output (GDP) (see chart). Sluggish wage grow despite an economy approaching full employment raises concerns about the durability of spending in future quarters and revisions. Employment data is often revised downward after the preliminary or advanced report.


Chart: Personal Consumption Expenditures As % GDP


Headline: Consumer spending propels economic growth in the 2nd quarter — but by less than expected

Stronger consumer spending accelerated the US economy in the second quarter, according to the Commerce Department's first estimate of gross domestic product released Friday.

This preliminary report, based on incomplete data, showed that GDP increased by 2.6%, signaling that the growth slowdown in the first three months of this year was temporary.


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