Market Minute - September 10, 2019

by Scott Rosenquist, CFA​

U.S. Consumer

The U.S. consumer has been the bright spot for the economy as trade uncertainty continues to weigh on the manufacturing sector.  The second revision for Q2 GDP released late August showed 2% annualized growth.  Consumer spending increased 4.7% in the second quarter and continues to offset weakness in other areas of the economy.  

As the chart from JPMorgan shows, consumer spending makes up two-thirds of the U.S. economy.  The strong labor market and low interest rates have been tailwinds for the consumer.

MM Chart 2019 09.png

Source: BEA, FactSet, J.P. Morgan Asset Management.
Values may not sum to 100% due to rounding. Quarter-over-quarter percent changes are at an annualized rate. Average represents the annualized growth rate for the full period. Expansion average refers to the period starting in the third quarter of 2009. Guide to the Markets – U.S. Data are as of August 31, 2019.


The largest economic expansion in history has seen slower growth than previous expansions but continues to chug along.  The Atlanta Fed currently forecasts Q3 GDP at 1.5% but that number is revised often as new data is released.  Can the consumer hang on in the face of ongoing tariffs? 

The University of Michigan consumer sentiment index for August showed a large drop from the previous month (98.4 to 89.8) as consumers contemplate the trade war.  The latest round of tariffs that went into effect September 1st target consumer goods including clothing and electronics.  A second round aimed for mid-December will cover laptops and smartphones.  This could dampen the spirit of consumers as the trade war starts to hit the pocketbook.

The Federal Reserve remains supportive of the economy as seen by the recent interest rate cut and forecasts are showing additional cuts this year.  We continue to monitor economic data to see if there is spillover from the weakness in manufacturing to the consumer side of the economy.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual.  Where applicable, all data and information has been gathered from sources believed to be accurate such as the internet, nonaffiliated 3rd parties, news articles and professional subscriptions but this information is not warranted to be correct, complete or true.   

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