Delta variants and high prices cannot disappoint American consumers
Coronavirus Economic Impact Update
Sign up for myFT Daily Digest and be the first to understand the news about the economic impact of the coronavirus.
In recent weeks, American consumers have been Price increased And the resurrected virus. But due to vigorous fiscal stimulus and stable employment growth, this has not stopped them from spending.
U.S. household consumption drives the country’s annual growth rate of 6.5% gross domestic product Data released by the Ministry of Commerce late last week showed that growth in the second quarter rebounded healthily in June. The composition of expenditures has shifted from goods to services, but the overall desire of shoppers to use cash is unquestionable.
Michel Meyer, head of U.S. economics at Bank of America, said: “After such a big shock, the economy is so resilient, partly because consumers have extraordinary spending power and willingness.” “The overall fundamentals remain strong, with As people return to work, there will be more participation in the fall office Then go back to school. “
So far, economists and officials are not in a hurry to lower their forecasts for the US economy based on the spread of the Delta variable, even though it brings more risks to the outlook.
Federal Reserve Chairman Jay Powell said at a press conference last week that compared with the past, the relationship between pandemic conditions and economic conditions is now less, and individuals and businesses seem to be more capable of adapting.
Powell said: “With the successive waves of Covid in the past year and months now, the impact of each epidemic on the economy is often smaller.” “We don’t have a strong sense of how this might work, so we just Monitor it carefully.”
Jefferies Chief Financial Economist Aneta Markowska stated that “family finances are at their best in decades”, citing a strong income statement and a large amount of accumulated savings. She estimates that it is US$2.4 trillion, of which about half is cash. And savings. Check the deposit.
Spending on durable goods contracted for the third consecutive month, but the recent decline was largely due to a 7.7% drop in car sales, as scarcity and surprisingly high prices discourage buyers. Spending elsewhere has been strong-the personal savings rate reached 26.9% in March and has now fallen to 9.4%.
“The last round of stimulus measures exceeded expectations,” Marcoska said. “We not only made up for the loss of income caused by the pandemic, but also replaced it.”
Mastercard Chief Financial Officer Sachin Mehra said in an interview that corporate spending has rebounded faster than expected, but still lags behind the surge in consumer spending.
“What we are seeing is that people increasingly feel the need to go out to meet customers, meet their suppliers, and contact their business partners. This is reflected in how they use their business expenses.”
This trend applies to small businesses, medium-sized companies and large multinational companies, and helped the payment group report a 36% increase in quarterly revenue last week.
According to Mastercard competitor American Express, so far, small businesses are in a leading position. In the most recent quarter, spending by small and medium-sized businesses in the United States rebounded to 73% of pre-pandemic levels, while corporate customers charged less than a quarter of American Express card spending during the same period in 2019.
Chief Financial Officer Jeff Campbell said: “The interesting thing is that even now, small companies travel more than large companies,” he added, adding that this trend is unlikely to reverse by the end of this year.
“In large companies, you really don’t see any signs of life right now, and we don’t expect any signs.”
However, both companies are optimistic that business travel will make a comeback, especially when their own employees start booking flights. Mastercard has resumed face-to-face meetings with customers, which Mehra expects will have a knock-on effect on the entire industry.
“The fear of missing out will begin,” Mehra said.
So far, there is little evidence that high inflation rates have greatly suppressed personal or corporate spending. According to the Consumer Confidence Survey of the University of Michigan, although inflation expectations for next year have risen to 4.7%, it is expected to fall back to 2.8% within 5-10 years, indicating that most Americans do not believe in a dangerous spiral, and are not convinced by recent data. Quite calm.
James Knightley, chief international economist at ING, said: “People recognize that prices are rising, but they still have the ability to do things.” “They may not be happy to spend 9 dollars on beer, but they will do it because they haven’t done it for a long time. NS.”