Yahoo Finance
The US consumer has displayed remarkable resilience this year amid high gas and food prices.
But that resilience may soon be put to the test, Goldman Sachs economists warned.
The call:Sales among consumer-facing companies rose at a healthy pace in the second quarter, Goldman Sachs economist Jan Hatzius wrote in a new note.
Powered by higher-than-planned tax refunds, second quarter sales at consumer companies rose 5.9% year over year among the median S&P 500 consumer discretionary company and 3.9% for the median consumer staples company.
The strength in consumer spending was broad-based, with same-store sales — a key metric for retailers — accelerating for companies serving both lower- and higher-income consumers.
"We expect sluggish consumer spending growth ahead," Hatzius wrote.
"Although Friday's drop in July retail sales partly reflected the negative impact of an earlier-than-usual Amazon Prime day, the revised sequential path now looks much more consistent with our view that the strength of real consumer spending in the spring was the temporary byproduct of the tax refund surge.
We expect real consumer spending growth to slow to 1-1.5% in the second half as real cash flow stagnates." Something to keep in mind:The US economy expanded at an annualized rate of just 1.5% in the second quarter, marking a deceleration from the 2.1% growth recorded in the first quarter.
Despite the headline slowdown, consumer spending accelerated to a 3.2% annualized pace — up from a sluggish 0.5% in the first quarter — serving as the main engine for underlying private domestic demand.
Household expenditures were boosted by spending across both goods and services, particularly in prescription drugs, motor vehicles, and food services.
"The consumer is OK and stable," Procter & Gamble CFO Andre Schulten said onYahoo Finance's Opening Bidin late July.
Schulten explained that P&G is seeing divergent trends among consumers, however.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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