A Warming Trend: US Consumers Step into the Sunshine
Mesirow Financial’s Chief Economist says a profound shift has occurred in American consumer confidence, as well as the ability to spend. After seeking shelter for years following the storm of the Great Recession, consumers of all income levels are finally equipped to step out into the sunshine.
Diane Swonk explains what has changed. “It wasn’t until this summer, a record-breaking five years into the expansion, that the pace of consumer spending reaccelerated…(because) Employment growth finally gained momentum. Incomes picked up. Prices at the pump fell.” She predicts that newly empowered consumers will lift the entire U.S. economy in 2015. “Real GDP is expected to average a solid 3% in the second and third quarters, then rise to the fastest pace since 2005.”
Decision makers on the Federal Open Market Committee will surely take notice, but don’t expect them to hike interest rates soon. Swonk is sticking to a more dovish view. Our forecast has “the Federal Reserve on the sidelines until the third quarter; we still see the fed funds rate ending the year at 0.5%.” To find out why, and understand how the pace of consumer spending supports growth, read the latest issue of Themes on the Economy. Archived issues can also be found at mesirowfinancial.com.
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Founded in 1937, it is an independent, employee-owned firm with approximately 1,200 employees globally. With expertise in Investment Management, Global Markets, Insurance Services and Consulting, Mesirow Financial strives to meet the financial needs of institutions, public sector entities, corporations and individuals. For more information about Mesirow Financial, visit its website at mesirowfinancial.com.