The Real Economy: Volume 61
Consumer outlook critical to 2020 growth
THE REAL ECONOMY |
It is nearly impossible to overstate just how important the consumer has become to the health of the economy in 2020. Because fixed investment and net exports have become a drag on growth, household consumption remains the most important driver of overall economic activity, and the difference between modest growth near 2% and an end to the current business cycle.
Consumption has been king since the second quarter of 2014—when the recovery from the Great Recession had finally taken hold, and the unemployment rate was approaching what was then thought to be its equilibrium level. The role of the American consumer grew even more important in late 2018, becoming the only consistently positive contributor to gross domestic product growth.
U.S. consumer spending has been the most consistent contributor to U.S. economic growth in the recent quarters, accounting for roughly 70% of overall economic activity. But that strength has not been the result of rising wages among low-wage households; instead, it’s the result of the high-income households’ spending fueled by deficit-financed gains in equity-market investments.
In this issue of The Real Economy, we explore the power of the consumer and their impact on the economy. In addition, we examine the outlook for global growth as well as the equipment-as-a-service concept in manufacturing. And in our Trend Watch feature, we assess middle market business sentiment according to the Q4 2019 RSM US Middle Market Business Index report. Download the full issue.
IN THIS ISSUE
U.S. consumer spending has been the most consistent contributor to U.S. economic growth in the recent quarters. We explore further.
The global economy has decelerated over the past two years as an uncertainty tax continues to damp overall economic activity.
Equipment-as-a-service could aid manufacturers looking to support ongoing, new or experimental projects, while keeping a lid on costs.