The labour market and the consumer are powering the U.S. economy forward amid ongoing global growth worries. And because of the health of households’ balance sheets, the chance of a recession remains low.
“Labour market conditions improved further even as economic growth slowed late last year,” said the Federal Open Market Committee (FOMC) in its Jan. 27 statement. This is a good omen for consumer spending to remain at a healthy level.
The strong position of U.S. households’ balance sheets provides a good counterbalance to the weakness seen in other parts of the U.S. economy, says Millan Mulraine, Deputy Chief U.S. Macro Strategist at TD Securities USA in New York.
“Any thought of a recession at this point is premature,” Mulraine tells Epoch Times. “Consumer spending will remain a lynchpin for U.S. economic activity.”
Consumer confidence has been rebounding at a time when financial markets have seen unprecedented January turbulence.
“Upbeat consumer confidence supports our forecast that household spending growth will rebound in early-2016 after moderating to an expected 2.0 percent annualized pace in the fourth quarter of 2015,” according to a Jan. 26 RBC commentary.
Quite in contrast to Canada where leverage measures are at record highs, the U.S. consumer has been far more responsible. U.S. households have been saving steadily between 4 to 6 percent over the past few years.
