US posts bumper GDP figures but questions remain over sustainability of household spending
Commenting on today’s US GDP figures, Quilter Investors portfolio manager Hinesh Patel says:
“These are a strong set of figures, although there were some economists predicting that GDP growth could nudge toward 5%. So it is a B+ rather than an A grade this time around.
“The key stat is personal consumption, which grew by 4%. There aren’t many developed economies right now where consumers are feeling so bullish. In the States consumers are opening their wallets, boosting spending and fuelling growth in the process.
“A note of caution, however - consumer sentiment can quickly turn and we remain cautious on the outlook for household spending sustainability. Real earnings growth peaked in Q3 2017 and as the ripple effect of rising oil prices comes through that will manifest itself in fuel costs eating into a bigger chunk of disposable income.”
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