Call it America’s $11 trillion advantage: Consumer spending is likely to steer the US economy safely through the shoals of deteriorating global growth and turbulent financial markets.
The combination of more jobs, falling gasoline prices and low borrowing costs will help lift household purchases. Such tailwinds probably matter more than Europe’s struggles or the slackening in emerging markets that caused the Dow Jones Industrial Average last week to erase its gains for the year, Bloomberg reported.
“We’ve got a lot of things working in favor of the consumer right now,” said Nariman Behravesh, chief economist in Lexington, Massachusetts, at IHS Inc. “To have that kind of strength is the biggest asset for the US. It’s a pretty rock solid footing.”
Household purchases make up almost 70 percent of the $16.8 trillion US economy and have climbed an average 2 percent in the recovery that’s now in its sixth year. Spending growth will accelerate to 2.7 percent next year after 2.3 percent in 2014, according to the latest Bloomberg survey of economists.
The poll, taken from Oct. 3 to Oct. 8 in the midst of the meltdown in equities, showed little change in the median projections from the prior month. The economy is forecast to expand 3 percent in 2015 after 2.2 percent growth this year, according to the survey.
800-Pound Gorilla
“We’ve got the proverbial 800-pound gorilla -- the consumer,” said Joseph LaVorgna, chief US economist at Deutsche Bank Securities Inc. in New York. “Households are more fixated on the good news here, and a big part of that is the labor market. The US is going to be pretty immune to the rest of the world.”
Economic weakness in Europe, slowing growth in China and tensions in the Middle East sparked a $3.5 trillion loss in value for global equities through last week since a record in September.
