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American consumers have been hit in recent weeks Price increase And the resurrected virus. But thanks to heavy fiscal stimulus and steady employment growth, it didn’t stop their spending.
US household consumption has resulted in a 6.5% annual increase in the country GDP Second-quarter growth shows a healthy recovery during June, according to data released by the Commerce Department late last week. The composition of spending is shifting from goods to services, but the overall enthusiasm of shoppers for spending cash is undeniable.
Michelle Meyer, Head of the US Economic Sector at Bank of America, said: “The overall fundamentals are still strong and people office I’m going back to school. “
So far, economists and officials have not rushed to downgrade US economic forecasts based on the spread of delta variants, even if they pose additional risks to the outlook.
Federal Reserve Board Chair Jay Powell suggested at a press conference last week that the relationship between the pandemic situation and the economic situation is less than before, and individuals and businesses appear to be more adaptable. ..
“The waves of Covid have been on the rise over the past year and months, and each wave has tended to have less economic impact,” Powell said. “I don’t have a strong sense of how it works, so I just monitor it carefully.”
“Households were at their best in decades,” said Aneta Markovska, chief financial economist at Jeffreys, citing a strong income statement and a huge stock of accumulated savings. .. Check your deposit.
Durable goods spending has shrunk for the third straight month, but the recent recession was largely due to a 7.7% decline in car sales, as scarcity and surprisingly high prices kept buyers away. Spending was strong elsewhere, with personal savings, which reached 26.9% in March, dropping to 9.4%.
“The last stimulus went beyond that,” Markovska said. “It wasn’t just about compensating for the loss of income from a pandemic, it was just about replacing it.”
In an interview, Mastercard Chief Financial Officer Sachin Mehra said corporate spending recovered faster than expected, but still lagging behind the surge in consumer spending.
“What we see is that people are increasingly feeling the need to go out to meet their customers, meet their suppliers, and engage with their business partners. Is clear in terms of how they are exercising commercials. Spend. “
This trend also applies to small businesses, midsize businesses, and large multinationals, helping payment groups report a 36% increase in quarterly revenue last week.
So far, small businesses have taken the lead, according to MasterCard’s rival American Express. Overall US SME spending recovered to 73% of pre-pandemic levels in the last quarter, but corporate clients charged less than a quarter of what they spent on Amex cards during the same period in 2019. did not do it.
“What’s interesting is that small businesses still travel more than large companies,” said Jeff Campbell, chief financial officer, and this trend is unlikely to reverse by the end of the year. I added.
“Currently, it’s the big companies that don’t really see any signs of life, and we don’t expect anything.”
However, the two companies are optimistic that corporate travel will return, especially when their employees begin booking flights. Mastercard has already resumed direct meetings with clients, and Mehra expected it to have a spillover effect across the industry.
“The fear of missing begins,” Mehra said.
So far, there is little evidence that rising inflation is putting a big damper on spending, either personally or on the business side. According to the University of Michigan Consumer Psychology Survey, inflation expectations rose to 4.7% next year, but are expected to return to 2.8% over a five- to ten-year period, making most Americans a dangerous spiral. , Recent data is not quite disturbed.
“People are aware that prices are rising, but they still have ammunition to do things,” said James Knightley, ING’s chief international economist. “They may not be happy to spend $ 9 on beer, but they haven’t done it for so long, so they’re going to do it.”
Delta variants and high prices can’t hold back US consumers
Source link Delta variants and high prices can’t hold back US consumers