Economists are questioning how long U.S. consumers can maintain their current spending pace in the face of high unemployment, stagnant housing prices and reduced access to credit.
After dipping last year, consumer spending is rising by more than 3.5 percent, its fastest rate in three years, but it faces “plenty of headwinds” and can’t continue indefinitely, said Nigel Gault, chief U.S. economist at IHS Global Insight, during a webcast that his firm hosted.
“The question to us is: How far can we sustain consumer spending just on pent-up demand?” he said.
Gault said consumer spending, which represents 70 percent of U.S. GDP and is a key driver of containerized import volume, is likely to stabilize at an annualized growth rate of about 2 percent or slightly above during the next two years, roughly in line with growth in disposable income.
Spending is outpacing the rate of personal savings, which is dropping, and surveys indicate that consumer sentiment is still “pretty cautious,” Gault said.
Earlier Tuesday, Wal-Mart, the world’s largest retailer and the top U.S. importer of containerized cargo, reported a 10 percent jump in net income but said sales at stores open at least a year dropped 1.1 percent and its customers remain worried about jobs and finances.
“Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices,” said Mike Duke, Wal-Mart’s president and CEO.
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