While the U.S. economy is going into the fourth quarter strong, there are concerns about weaker consumer spending this holiday season.
The Wall Street Journal reported that the Commerce Department, in separate reports, said household spending rose in October, while orders for long-lasting factory goods saw a boost. The U.S. economy also expanded at a slightly better pace than was anticipated.
“Growth is still on track” despite circumstances including a 40-day strike at General Motors and the grounding of Boeing Co. ’s 737 MAX airplane, said Brian Bethune, an economist at Tufts University.
The report also showed that the country’s gross domestic product increased at a 2.1 percent annual rate in the third quarter, which was up from the previous estimate of 1.9 percent.
The latest reading “indicates the economy is not about to fall off a cliff,” Oxford Economics said in a note to clients. “However, the lingering global industrial slump, persistent trade policy uncertainty and cooling income growth all point to weaker activity in the coming months,” economists Gregory Daco and Lydia Boussour said according to reports.
But while consumer spending has been a primary factor in the economy’s health, there are signs that consumer confidence could be slowing down. The Conference Board just reported its consumer confidence index fell in November for the fourth consecutive month. And data shows that consumer spending grew at a solid, yet slower, pace in the July-to-September period compared with April to June. Major retailers such as Kohl’s, Macy’s, Nordstrom, and J.C. Penney have also reported weak sales.
In addition, business investment remained weak, and U.S. corporate profits fell in the third quarter due to in part to legal settlements with Facebook and Alphabet. The labor market, however, is still strong, with the number of Americans applying for first-time unemployment benefits falling last week and the unemployment rate at 3.6 percent in October.