US Economy Shows Signs of Slow Growth Amid Consumer Changes

The US Commerce Department has recently revised the second quarter GDP upward by two-tenths of a percent. This adjustment follows the personal consumption expenditures (PCE) report, which highlights a half-percent increase in consumer spending. Gus Fosche, Chief Economist at PNC Financial Services Group, shared key insights into the current economic landscape, emphasizing that while growth is continuing into the summer of 2024, it is slowing at a healthy pace. With inflation rates also decreasing, it is anticipated that the Federal Reserve may implement a 25 basis point cut in interest rates during their upcoming meeting in September. This strategy seeks to support gradual economic growth and facilitate a 'soft landing' to avoid recession. However, growing concerns about the lower-income consumer's financial stability, evidenced by a recent Dollar General survey showing that a quarter of respondents expect missed payments in the coming months, raises fears of potential strain on consumer spending. Fosche noted that the upward revision of 88,000 jobs from previous employment reports reflects a slight weakening in the labor market. This trend raises questions about future job growth as the Baby Boomer generation retires, prompting discussions on the need for increased immigration to sustain economic development. Overall, the data paints a nuanced picture of the economy, suggesting steady growth but with significant challenges ahead.