Corporate Strength, Consumer Spending Should Boost Economy
Despite sluggish economic growth over the winter, consumers are poised to lead a resurgence in economic activity in the months ahead, our research team says in the new edition of Business Conditions Monthly.
The report is our once-a-month look at the health of the economy, including factors like inflation, monetary policy, Congress and investing. This month, we note that real gross domestic product growth was estimated at an almost stagnant 0.2 percent annual rate during the first quarter of 2015.
But our team thinks continued strength in areas like jobs, income growth, and consumer sentiment, as well as record high net worth foretell a stronger economy in the months ahead. The report’s lead author, AIER Senior Research Fellow Bob Hughes, describes a “virtuous cycle” that we expect to take hold.
“We believe American companies are quite healthy and are likely to respond positively to rebounding consumer spending, despite the drag from a strong dollar and slow global expansion,” according to the report. Companies “are likely to be a positive force supporting a reacceleration in the virtuous cycle of rising consumer spending leading to better earnings, which support business investment, jobs, and wage growth. These, in turn, support future increases in consumer spending.”
Check out the full report here.
