From no growth to, well, growth. From economic doldrums to a healthy, if not robust, picture.
On the heels of Black Friday and Cyber Monday, on the heels of continued consumer spending and positive personal income data – and flying in the face of downturns in manufacturing data – the U.S. economy may eke out gains for the final quarter of 2019.
Economists see a growth range of between 1.3 percent to 2 percent for the quarter. That’s a notably different picture than what was seen just a few weeks ago, where expectations had been for, roughly, no growth.
Amid a slew of predictions: The Atlanta Federal Reserve’s GDPNow measure sees 1.3 percent growth, taking into account the data in recent weeks that showed gains in personal income, durable goods and housing, and ISM Manufacturing data that was below expectations.
In other readings: CNBC’s Rapid Update reading of economists’ forecasts has estimated the fourth quarter’s growth at 1.6 percent, while Goldman Sachs has a 1.9 percent forecast.
The positive projections do indeed show a GDP growth rate that had been lowered from the 3 percent-plus readings seen at the beginning of the year. But it should be noted that the dual and continuing impacts of the trade/tariff war with China, as well as persistently low inflation, had brought estimates down to flat levels.
As quoted by CNBC, Joseph Lavorgna, chief economist of the Americas at Natixis, said that “we went from a recession scare earlier this summer, then to a growth scare, to what I would argue is setting ourselves up for a pretty solid 2020, in part because the high-frequency data isn’t as bad as people thought. People were far too pessimistic.”
At least some economists expect a rebound in manufacturing activity after several months of decline (where readings have been below 50), and this would provide a further tailwind heading into 2020.
But it is the consumer that remains the engine of growth, a longstanding trend, with consumer spending accounting for about two-thirds of economic activity. As noted in this space in recent days, spending was up 30 basis points in October, accelerating from the 20-basis-point rise seen in September. At the same time, wages were up 40 basis points in October, up from 10 basis points in September.
Headed into the all-important holiday shopping season, all signs point to healthy consumer spending. PYMNTS surveyed 2,000 consumers and found that overall spending increased by more than 34 percent on Black Friday, year over year. Drilling down a bit, the largest increase in spending was seen among individuals earning more than $100,000, who spent 34 percent more, followed by those earning between $50,000 to $100,000, who spent 25.5 percent more. In absolute dollar terms, millennials were among the biggest consumers on Black Friday, spending more than $509, while the average was a bit more than $382.