SUMMARY

  • U.S. Consumers Carry the Day
  • Of Paris And Pensions
  • Australia Under Fire

January can be a precarious month for personal finances and personal fitness. The financial and dietary costs of holiday revelry must be paid this month, and doing so is not always easy. As this process unfolds, many resolve to tighten their belts: physically on their waistbands, and metaphorically in their wallets.

This month of quieter consumption is a good time to take stock of the outlook for U.S. consumers. Consumer spending has been the most encouraging trend in recent reports of U.S. economic growth. While trade uncertainty made exports volatile and took business investment into negative territory, consumer spending showed reliably strong growth in the first three quarters of 2019. A $21 trillion economy is quite a burden for consumers to carry, but they appear to be up to the task.

Closing the books on 2019, we see another year of healthy consumer spending. Retail sales grew by a strong 5.8% in December, helped by a late Thanksgiving that pushed the peak holiday shopping weeks later into the year. E-merchants continued to gain at the expense of traditional department stores, but overall results beat expectations for the season.

Weekly Economic Commentary - January 17, 2020 - Chart 1

It should be no surprise that consumers remained active in 2019. When consumers work, they gain income, and they spend it. The unemployment rate is holding at a historically low level of 3.5%, and job openings are plentiful. For the past two years, over 20% of small business owners surveyed by the National Federation of Independent Business identified a lack of quality labor as the most important problem facing their companies.