How well are consumers consuming?

Posted by: Paul Donovan

29 Mar 2019
  • Today is a consumer-focused day. Consumer spending numbers come from Germany, France and other European economies. The European consumer (except the Italian, of course) has a lot to be cheerful about. Labor markets are strong. Bank lending is normal. There are localized problems (riots on the Champ Elsysee deter shoppers), but the numbers should be consistent with trend-like growth.
  • US personal income and spending numbers are due, although the spending data is a little old. The evidence is that the US consumer is happy. Income data is interesting. The labor share of the economy may be rising (yesterday's data implied the profit share of the economy is falling).
  • Japanese industrial production bounced back in February, as expected. The sectors of the economy most exposed to Asian trade led the recovery, implying broader improvements in the region. As trade tensions calm, companies are more likely to invest. Investment spending is important in driving exports.
  • UK investment spending is likely to stay weak. The interminably tedious EU-UK divorce delays investment. The government is to submit the withdrawal agreement but not the political declaration to Parliament today. There is little expectation of it passing. It is increasingly unlikely that this Parliament can move forwards.

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