US consumers showed US economic resilience last month as they kept spending even as fear of a slowing economy continued to rise. The latest data from the Commerce Department, released on Tuesday, shows that consumer spending at US retailers rose by 0.6% in August. This 0.6% increase marks the second month in a row, matching the similar 0.6% increase in July that was revised upward from previous estimates.
Economists had predicted a much smaller gain of just 0.2%, so the actual numbers were a pleasant surprise. This continued consumer optimism is an encouraging sign in particular because Americans have grown more downbeat than ever about the prospects of the economy. Concerns about potential job losses and a slowing labor market have led to speculation regarding the sustainability of this spending pattern.
While employers have slowed hiring in recent months, US consumers have not yet significantly curtailed their spending. To a large degree, consumers can only hold the line on spending if the labor market continues to do so. That’s particularly so if there aren’t noticeable increases in layoffs. If labor market prospects do turn more negative, a relatively strong trend in consumer spending could upend on a dime.
In particular, President Donald Trump’s global and targeted tariffs have driven up prices, as the Consumer Price Index clearly indicates. Despite these economic pressures, they have failed to dramatically dissuade consumers from engaging in…While higher tariffs and a cooling labor market appear to have started to impact spending patterns, the overall effect has not been dramatic. For now, US consumers remain willing to open their wallets, showing a level of optimism that contrasts with broader economic anxiety.
When the summer wrapped up, consumer spending in the United States remained resilient. This is a sign that Americans are starting to face economic uncertainties with confident caution. The balance between consumer confidence and labor market stability will be key in figuring out if this trend has far legs.