The US data slate was generally in line with expectations except for soft personal spending at +0.2% compared to +0.4% expected. Look for downward revisions to Q2 growth estimates following the report.
The numbers aren’t detailed but the cause of the miss might have been the same as yesterday — far lower healthcare spending as a result of changes due to Obamacare. Services spending was soft while outlays on food and energy continued to rise.
What’s causing the fall in healthcare spending is a bit of mystery. In theory, forcing uninsured people to buy coverage would cause a rise in spending on premiums alone so something doesn’t add up. It could be that Obamacare is working to drive down prices or causing parts of the private industry to re-examine itself. It could also be that insurers are denying claims more frequently.
The good news is that that savings rate rose so if spending is restrained, at least it’s going to repair consumer balance sheets.
