US Growth Accelerates to 2.4% on Resilient Consumers, Companies
bloomberg.com
bloomberg.com
Because it's being driven by "current-dollar personal income increas[ing] $236.1 billion in the second quarter" [1]. Also, the "personal saving rate—personal saving as a percentage of disposable personal income—was 4.4 percent in the second quarter, compared with 4.3 percent in the first quarter.”
Together, these data provide evidence for consumers spending from a position of strength, rather than being forced to.
[1] https://www.bea.gov/news/2023/gross-domestic-product-second-...
Kind of like storing food for a long winter?
In the long run "households reduce their savings rate when consumer sentiment is high" [1]. In the short run, "higher interest rate is associated with higher personal savings rates while increases in real disposable income are associated with declines in the savings rate."
But households today aren't choosing to save rather than spend; they're increasing both. All while interest rates are high and household debt to GDP remains stable [2].
[1] https://www.researchgate.net/profile/James-Payne-4/publicati...
When times are in-between good and bad, I save at a much slower rate (my baseline savings rate of 10% of my net income). Right now, that's what I've been doing -- but I think I'll be increasing the rate of savings here soon. Things seem to be easing.
When times are bad, I'm more likely to dip into my savings.
My saving rate isn't tied to where I think the economy will be tomorrow, it's tied to where my personal economic situation is in the moment.
Basically, I don't vary my standard of living according to the state of the economy. I vary my savings rate instead.
How much of that spending is fueled by debt? How much of that is high interest debt? How much of the pullback is because of student-loan repayment looming?
If the yield curve wasn't inverted I'd be more optimistic.
Edit: This is an inaccurate assessment.
This is real GDP [1]. The 2.4% is inflation adjusted.
[1] https://www.bea.gov/news/2023/gross-domestic-product-second-...
I’m spending so much more for basic essentials like food, gas, and rent that there isn’t nearly as much disposable income and money left to save and invest as there was a few years ago. I’ve even received a few pay raises in that time, but they haven’t come close to keeping up with inflation. Maybe the people that think it’s a good economy don’t have kids to feed?
I don't have to guess about these things, I have receipts. Still, everyone here and on the news tells me things are great!
Doesn't matter if the benefits go to 1% of the population. Doesn't matter is it is at the expense of people's health or solvency. From a capitalist standpoint, more people in debt is good because it creates money out of thin air [1]. More people sick is good because that increases the size of the health market, et cetera.
[1] https://www.bankofengland.co.uk/explainers/how-is-money-crea...
See the Parable of the Broken Window, 1850.
The economy is getting healthier, but it was recently very sick. Many Americans are better off today than they were last year, but worse off than they were in 2020. This is best illustrated by a chart of real earnings [1].
Suggesting that it coming off of that to a more normal growth pattern makes the economy very sick seems like a mischaracterization.
Sorry if I was unclear. The sickness was the literal pandemic. The economy isn't currently sick, but it's not as robust as it was in recent memory. Many Americans can reasonably look at the data, see everyone remarking at the economy's unexpected strength, find themselves in no better condition than they were half a decade ago, and feel tempted to call shenanigans on the whole thing.
When all the high inflation stuff was coming out I was baffled. My home expenses were essentially flat. And coming off of covid my savings and investments were stacked. But I wasn’t trying to buy a car and my mortgage was pre rate hikes, and I rarely drive and am in good health. It’s entirely possible there wasn’t any inflation for me.
https://fred.stlouisfed.org/series/GASREGCOVW
Gas prices are not any higher than they were throughout the 2010s.
https://www.forbes.com/sites/rrapier/2023/03/08/average-gaso...
State gas taxes do change often. For example, Washington’s gas taxes went up at least $0.50 since Jan 1 (and it is variable based on the price carbon credits get auctioned at).
https://ecology.wa.gov/blog/february-2022/the-climate-commit...
I don't live in the US, I had a friend recently disclose that she uses a food bank more than once a month.
If some politician came along and offer a MAGA approach to my country I'd vote for them.
The US has the extraordinary economy to afford it. We can't even support single parent families with enough to eat.
Then you should educate yourself on what populist politicians promise and what they end up delivering.