The U.S. consumer generates approximately 70% of GDP through goods and services consumed. Personal income growth and consumer confidence trends remain elevated, which would support economic growth over the near term.
Personal income grew 3.7% y/y in February, down slightly from 3.8% achieved in January and up from recent lows of 1.5% in December 2016. In addition, inflation rates remain low, however continue to move higher from cycle lows. The increase in inflation has been partially caused by the employment growth and low unemployment rates leading to wage growth.
February’s consumer confidence reading of 99.7 remains near its multi-year high of 100.7 that was reached in October 2017.
Given the current personal income growth and consumer confidence trends, we would not expect any changes to recent economic growth trends in the near term. However, any derailments of these trends would cause us to reevaluate our economic outlook.