Consumer spending is showing signs of slowing, specifically among low-income Americans, which is a concerning sign for the economy, reports The Washington Post.
Spending at U.S. retailers jumped 0.6% last month, more than double economists’ expectations of 0.2%, according to Commerce Department data released earlier this week. But consumers in the top 10% of the income distribution accounted for 49% of total spending in the second quarter, the highest level since Moody’s Analytics began collecting the data in 1989.
“U.S. consumer spending is not just softening overall, it’s doing so in a fragmented way … and that’s a real problem,” Claire Li, a Moody’s vice president of credit strategy, told the Post.
“If the benefits and the pressures are not shared broadly, then we’re not looking at a balanced or a healthy state of the U.S. consumer base.”
Mark Zandi, chief economist at Moody’s Analytics, told CNN the economy’s prospects “are tethered to the fortunes and spending of the well-to-do.
“If [the top-earners] turn more cautious in their spending, for whatever reason, the economy will suffer a recession,” he said. That could happen if there were a significant correction in stock prices, he added.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.