United States Etas-Unis

United States: A spring awakening for household spending

CHART OF THE WEEK

US household spending grew 0.4% in April and the numbers for March were revised up to 0.5%, making for two strong months following two straight falls in January and February. Low spending levels at the start of 2018 were more of a hangover effect from the holiday season than a real drop in spending, which had been particularly buoyant at the end of 2017.

United States household consumption monthly

 

OUR ANALYSIS

Strong growth in the past two months has completely offset the two previous falls, and we can now expect the situation to normalise. In the past two months, the savings rate has fallen to 0.4%, which is unsustainable, but economic fundamentals remain healthy.

The employment report that was published at the start of June underlines a strong job market. Job creations remain plentiful and hourly earnings are rising steadily and this should underpin disposable income levels.

Higher oil and petrol prices do not yet appear to have had any major impact on consumer spending: household sensitivity to them appears to be lessening. A closer look reveals that despite an increase in the price of petrol to almost 3 dollars per gallon, spending on fuel and energy now accounts for just 2.5% of the average basket of goods, versus 3.6% between 2011 and 2014 when petrol cost about 17% more (3.5 dollars per gallon on average).

 

The opinion expressed above is dated 6 June 2018 and is liable to change.

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.


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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée