Consumers drive growth amidst trade-war
The mounting pressure on the growth of economies around the world due to the repercussions of proposed Brexit and trade war between US & China has put the onus of driving growth on shoppers around the world. Economists at Morgan Stanley are already warning that American consumers are all that stand in the way of a U.S. contraction.
“Consumer spending will be the main driver of growth in the second half, so barometers of household demand, such as sentiment, savings patterns and income growth, will be major focal points in the medium term. For this reason, the cooling in the ISM employment sub-index bears watching,” stated Carl Riccadonna, chief U.S. economist, Bloomberg.
However, given the weakness in manufacturing, ensuing retrenchment and the tightening of financial markets, it remains to be seen for how long consumerism can support growth.