A recent article in CNN Money.com was interesting because it spoke directly to the issue of consumer spending. Consumer spending, officially known as Personal Consumption Expenditures (PCE), comprises 70% of real GDP and is therefore, the driving force as to whether or not the US economy has a soft landing or a recession. PCE is made up of durable and non-durable goods consumption and the consumption of services.
PCE is a function of income growth and the number of employed in the economy.
"Income growth is the No. 1 risk to spending. The other is jobs," . . . . "These [two indicators] would be the deciding factor on whether or not consumers will have the ability to keep shopping in the months ahead," . . .
The next big test as to how the consumer is feeling about consuming will be when school starts.
. . . . his point of clarity will come in a few months as retailers prep for the critical back-to-school shopping season.
"That's the second biggest selling season for stores after Christmas, . . . The sales numbers in July, August and September will be crucial and we'll better know about the state of consumers by October."
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