Real consumer spending is forecast to increase by 2.6% in 2017. While this matches the expected pace of consumption in 2016, it is well below the 3.2% achieved in 2015. The possibility that we are not seeing faster spending growth this year may seem surprising given the apparent strong consumer fundamentals and the huge jump in sentiment from the corporate sector; however, consumption is also likely to be faced with a number of headwinds that it didn’t experience in 2015 and 2016. In this week’s Economics Weekly, we examine these fundamentals in an overall assessment of the current state of the U.S. consumer, including what are likely to be the main drivers of consumption.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.