Struggling U.S. Economy Propped Up by Consumer-Spending Gain
The U.S. economy stumbled in the first half of 2016 as companies retrenched, leaving consumers to shoulder the burden of sustaining growth heading into the presidential election.
A 4.2 percent gain in household purchases in the second quarter, among the biggest of the current expansion, was the lone bright spot in an otherwise bleary picture as the economy had its worst first half since 2011. Businesses hunkered down, trimming inventories and reducing outlays on equipment and construction projects, while government agencies also cut back. That limited the gain in gross domestic product last quarter to a 1.2 percent annualized rate, figures from the Commerce Department showed Friday, less than half the advance projected by economists in a Bloomberg survey.
While the magnitude of the surge in consumer spending is unlikely to be sustained, a strong job market will probably give Americans the means to keep driving growth as Hillary Clinton and Donald Trump spar over wholl lead the worlds largest economy. A contentious election and uncertain global growth prospects call into question whether companies will keep hiring at a rapid clip and be more willing to invest.
"I dont think U.S. consumers can continue to do the kind of heavy lifting that they have done," said Millan Mulraine, deputy head of U.S. research and strategy for TD Securities USA LLC in New York. "It means we must have some hand off of that work from consumers to business investment in particular."
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http://www.bloomberg.com/news/articles/2016-07-29/struggling-u-s-economy-propped-up-by-gain-in-consumer-spending
SunSeeker
(51,550 posts)It forces companies to invest profits back into the business. Lowering raxes like Bush did encourages doling out profits to rich owners/executives, who then sock it away, which is what has been happening.
Bill USA
(6,436 posts)Last edited Tue Aug 2, 2016, 06:59 PM - Edit history (1)
http://www.bls.gov/opub/ted/2016/wages-and-salaries-for-private-industry-workers-increase-2-point-6-percent-over-the-year-ended-june-2016.htmThat statistic gives a good indication of how much sustained increase in consumer spending those who want to sell product will see.