“Consumer spending slowed in August as the market turbulence and trade war escalation had shoppers stepping back from the stores and malls and saving more for a rainy day,” said Chris Rupkey, chief economist at MUFG in New York. “The good news is the data today are a gentle reminder that there’s no recession anywhere out there on the horizon.”Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.
But with tariffs on Chinese goods broadened to include consumer goods, there are fears that spending could slow. There are also worries that weak business investment and sluggish profit growth could constrain companies’ ability to continue hiring more workers, and undermine consumer spending. In another report on Friday, the Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 per cent last month amid weak demand for electrical equipment, appliances and components, and computers and electronic products.Data for July was revised down to show these so-called core capital goods orders unchanged instead of gaining 0.2 per cent as previously reported.
Powell last week said trade policy tensions, which “have waxed and waned, and elevated uncertainty is weighing on U.S. investment and exports,” adding that U.S. central bank contacts had told policymakers that trade policy uncertainty “has discouraged them from investing in their businesses.”The economy grew at a 2.0 per cent annualized rate last quarter, slowing from the January-March quarter’s brisk 3.1 per cent pace. The Atlanta Fed is forecasting gross domestic product rising at a 1.
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