CIBC writes about today's GDP and the US consumer going forward.
Personal consumption rose at a 2.8% annualized pace in the report, a deceleration from 3.1% in Q3 but still at a healthy clip, including an increase in services consumption to 2.4% from 2.2%.
The slight deceleration in consumption growth was accounted for by an easing in the pace of goods spending. Although durable goods spending slowed, given how restrictive monetary policy is, it's impressive that it's still 6% above year-ago levels," CIBC writes.
"Despite slower labor income, total income growth gained momentum, supplemented by higher interest and dividend income, while real incomes were boosted even more by the easing in inflation. The saving rate dipped to 4.0% in Q4, well below the 7.0% level that prevailed pre-pandemic, and an unsustainably low level in our view. Signposts of consumer health have deteriorated lately, with delinquency rates for some consumer loan products rising, buy-now-pay-later borrowing increasing, credit card balances stretched, and excess savings being depleted, which all point to a slower pace of consumption ahead."
The December retail sales report was very strong and sales are up in seven of the past eight months but the consumer might be running on fumes at this point. Then again, the old adage is to never underestimate the US consumer.
