The U.S. economy is still growing, but not as fast as it was earlier this year, National Retail Federation (NRF) Chief Economist Jack Kleinhenz said today.
“The U.S. economy continues to expand but recent data is signalling a slowdown in its momentum,” Kleinhenz said. “The economy is slowing but not halting.”
“Progress has been made on combating inflation, but higher prices remain,” Kleinhenz said. “While consumers are still spending, the composition of their spending continues to favour services over retail goods and even then, there was less momentum going into the third quarter.”
Kleinhenz’s comments came in the September issue of NRF’s Monthly Economic Review, which said the Bureau of Economic Analysis now estimates that gross domestic product grew at a 2.1% annual rate adjusted for inflation in the second quarter rather than the 2.4% reported earlier. Gross domestic income, which measures the value of wages, rent, interest and corporate profits earned during production, rose by a more modest 0.5% annual rate. Averaged together, GDP and GDI were up 1.3%.
The economy added 187,000 jobs in August, up from 157,000 in July but well below the average monthly gain of 271,000 over the past year. Despite the weaker-than-average job gains, slower wage growth and higher unemployment, personal spending increased 0.8% month over month in July, up from 0.6% growth in June. With spending growth outpacing income growth, the savings rate dipped to 3.5% in July from 4.3% in June, “suggesting that consumers are digging into their finances to support household spending.”
“Consumer confidence took a bit of a hit in August as high prices and interest rates weighed on shoppers’ decisions,” Kleinhenz said. The Conference Board’s Consumer Confidence Index fell to 106.1 from July’s 114 while the University of Michigan Consumer Sentiment Index dropped from 71.6 in July – the best reading since October 2021 – to 69.5 in August.
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