FTT: US consumers are back: spending more, saving less
The news on US consumers is good, at least for those who want them spending rather than saving.
Consumer spending (in nominal terms) jumped more than forecast in May, clocking the biggest monthly gain since 2009, as car sales helped drive a 0.9 per cent increase from April's level.
Higher spending helped push the savings rate down to 5.1 per cent in May from 5.4 per cent in April.
Here economists pick over the report.
Capital Economics
This is slightly stronger than we anticipated before and, consequently, means that there is more of a risk that overall second-quarter GDP growth will end up being higher than our current 3.0% estimate.
In short, both the real activity and price data support a September rate hike.
Barclays
The rebound in consumption drew down the savings rate to 5.1% in May (previous: 5.4%), supporting our view that the recent gains in household savings from stronger labor markets and lower energy prices will help support solid consumption growth over the next few quarters
FTN Financial
Before this morning's release, Q2 consumer spending growth was tracking 2%. Now, consumption growth looks like 3.1%.
Looks like the "substantially stronger" growth Governor Powell wants before voting to hike rates is here. (Here is fastFT's post on what Mr Powell said earlier this week.)
Royal Bank of Scotland
Real consumer spending was stronger than expected, at 0.6%; we are now tracking at 3% or slightly above for Q2 real spending and GDP growth. Consumer spending has more room to run, since the savings rate is still elevated
JPMorgan Chase
Spending growth softened during the unusually harsh winter, but has picked up noticeably since then—real consumption increased 4.2% saar over the most recent three months, a nice pickup from the 0.8% saar growth reported over the three months through February.
