Despite many predictions of a recession this Summer, the U.S. economy continues to chug along strongly, including consumer spending on luxury items, which typically see reduced demand in a faltering economy. Plastic surgery, motorcycle sales, cruise sales, and expensive concert ticket sales are four examples that are all booming this Summer. Consumer spending is especially important as the largest contributor to the US economy.
Many businesses took actions to prepare for a slowing economy that never came. Unemployment is near a 50-year low, inflation has been going down for some time, and wages are rising faster than inflation. Orders for American-made goods are up, and retail & restaurant sales climbed for the fourth straight month in July. The Federal Reserve in Atlanta is predicting 4% economic growth in Q3 2023. Two of the largest banks, JPMorgan Chase and Bank of America changed their recession forecasts to predictions of economic growth through the end of 2024.One worrying sign, however, is The Conference Board Leading Economic Index (LEI) for the U.S. declined by 0.4% in July. The LEI indicates where the economy is heading. The July decline followed a 0.7% decline in June. The LEI is down 4.0% over the January to July 2023 six-month period. This is slightly worse than between July 2022 to January 2023, when it declined 3.7%. The LEI has declined 16 straight months ending in July. The July decline is attributed to: weak new orders, high interest rates, a dip in consumer perceptions of the outlook for business conditions, and decreasing hours worked in manufacturing.
For more information on the strong economy this Summer, read The Washington Post story, here. For more information on the declining Leading Economic Index, read The Conference Board press release here