Strong Employment, Low Inflation Support Consumer Spending
Robert Brusca, chief economist at Fact and Opinion Economics, told CNBC’s “Squawk on the Street” that strong employment and low inflation will continue to support consumer spending.
“I’m not worried about the consumer right now,” Brusca said Friday. “Consumer incomes are growing strongly. We saw in the jobless report this week that claims were below 300,000. That shows you the job market is in good shape. Consumers have jobs and incomes –- they’re going to be fine.”
The Commerce Department said U.S. retail sales fell 0.2% in April. It was the largest decline in retail sales since last September. Excluding autos, retail sales were flat.
The Labor Department said wholesale prices rose 0.7% in April, down from a 1% increase in March. Gasoline prices jumped 8.2%, following increases of 8.7% and 5.3% in the previous two months.
Outside food and energy, prices were unchanged last month, the second straight month the core inflation index was flat.
But Stuart Hoffman, chief economist at PNC Financial Services Group, took a more cautious view.
“I’m not saying the consumers are going to hit a wall and drive the economy into recession,” Hoffman said. “I just think the consumers are going to be tempered. They’re going to be hit by rising gasoline prices, falling home prices. And even though the claims numbers were down last week, I think job growth this quarter will be slower than last.”
He expects consumers to postpone purchases such as autos and clothing and cut back on discretionary expenditures such as eating out.
“I think spending this quarter will be less than the rate it was in the first quarter of the year,” Hoffman said.