Spending Hovers at Weak Pace, Economist Say
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Consumer spending in America probably stayed at the weakest pace in six months in January as income growth slowed and Americans struggled with a deepening housing slump, economists said before reports this week.
Spending was up 0.2%, matching a gain in December that was the smallest since June, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department’s February 29 report. Separate figures may show sales of new and previously owned homes fell last month. Sluggish wage growth threatens to dent consumer spending, the main driver of the economy, and raise expectations for more Federal Reserve interest rate cuts to prevent a recession. Manufacturing is slowing, house values are falling, and consumer confidence is waning, other figures may show this week.
“People will be monitoring these reports for a recession scenario versus a slowdown scenario,” a chief economist at Action Economics LLC, Mike Englund, said. “We’re skeptical of the story that consumers will pull back en masse. Everyone’s pretty much braced for poor numbers in housing.”
