The Bureau of Economic Analysis revised the US’s second quarter GDP print for the second time, raising it from 2.8% to 3%. US Bank Wealth Management senior investment strategist Rob Haworth joins Market Domination to discuss the data and what it signals about the state of the economy.
Haworth sees “resilience” in the US consumer, and with Friday’s Personal Consumption Expenditures (PCE) report, investors will likely see a clearer picture. “The consumer continues to find ways to maintain spending. And part of that is we have a very low unemployment rate at 4.3%. We continue to see job growth. Jobless claims are not ticking higher and we’ve had wage growth. So consumers are really still in an OK spot to spend money,” he explains.
He notes that while there is some weakness specifically among lower-income consumers, “that’s not yet really bleeding through to the overall spending levels for the economy.” While many fear that the economy is already in a recession, Haworth believes that’s not the case. “The consumer came into this with a strong background in savings, low credit costs. And then we’ve gotten wage increases and new people in the labor force. So that’s really still helping the economy as we move ahead,” he explains.
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This post was written by Melanie Riehl
We also had that GDP print this morning, Rob.
I’m curious to get your take on it.
Did it suggest to you, Rob and, uh, you know, an economy that’s still decent?
A consumer that’s still resilient.
Uh, yeah, resilience is 11 word we would keep using for the consumer, uh, especially backward looking, uh, tomorrow in addition to the P CE report, right?
You get personal income.
So we’ll get another glimpse of that consumer as we enter, uh, the third quarter, uh, meaning July.
And I think it’s important that they can, you know, can they continue to keep up?
It’s, uh, really they, the consumer continues to find ways to maintain spending.
And part of that is we have a very low unemployment rate of 4.3%.
We continue to see job growth.
Jobless claims are not ticking higher and we’ve had wage growth.
So consumers are really still in an OK spot to spend money.
There’s some signs of softness, particularly in the lower income cohorts, but that’s not yet really bleeding through to the overall spending levels for the economy.
So it’s, it’s definitely something that is going to make the fed’s job maybe a little easier as they still probably head towards cuts in September.
But the consumers may be not as soft as they, as people feared at the start of the month.
Did the recession come and go without us really noticing it, Rob.
Uh, well, I, I really don’t think we’ve had one in an economic sense.
I mean, certainly we had last year, the first two quarters of 2023 were negative earnings growth years for the S and P 500.
Uh, so we saw maybe earnings recession.
Uh, but I don’t think we’re, we’ve, we’ve seen a recession and we did, it doesn’t look like we’re headed into one because the consumer came into this with a strong background in savings, low credit costs.
Uh, and then we’ve gotten, uh, wage increases and, and new people in, in the labor force.
So that’s really still helping the economy as we move ahead.
All that still has to work through the system.