Consumer economy holding up…so far

Mitchell Hartman Feb 12, 2016
HTML EMBED:
COPY

Consumer economy holding up…so far

Mitchell Hartman Feb 12, 2016
HTML EMBED:
COPY

On Friday, the Commerce Department reports retail sales for January, while the University of Michigan reports on its monthly survey of consumer sentiment.

In the past several months, even as the U.S. economy has slowed and U.S. and global equity markets have been in turmoil, U.S. consumer spending and sentiment levels have held relatively steady and strong.

Some of that resiliency is due to low inflation, and in particular, the continued decline in gasoline prices, said economist Chris Christopher at IHS Global Insight.

Christopher said the typical American household is saving “about $14-to-$15 per week. What they’re doing with this extra money is, they’re going out to eat more, and they’re also buying light trucks over autos. It’s helpful for the economy.”

The message from the financial markets is not so encouraging, though, said Anthony Valeri, an investment strategist at LPL Financial.

“The consumer’s hanging in there,” Valeri said. “But I think this equity market is looking a little bit forward and saying ‘the consumer can’t carry the economy on forever.’”

This coming weekend, though, Valeri predicts love will carry the consumer economy forward. LPL analyzes Valentine’s Day retail sales every year, and Valeri is predicting an uptick in sales again this year. LPL tracks four categories of Valentine’s-related spending — a night at home, a night out, jewelry, and taking a trip. It finds that purchasing jewelry is the best buy in terms of inflation. Jewelry prices have fallen for the past four years, and were down 1.1 percent in 2015. In the global economic slowdown, prices for precious metals, including diamonds, have fallen.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.