US Consumers Continue to Spend Despite Income Pressure

US retail sales for May were stronger than expected, suggesting resilient consumer spending despite declining real household disposable incomes. Economic growth forecasts for the second quarter have been revised to reflect this strength.

Key Takeaways

• 1.US retail sales rose 0.9% in May, exceeding the 0.6% forecast, indicating resilient consumer spending.
• 2.Consumption is currently supported by lower savings and higher borrowing, as real household disposable incomes have fallen for three consecutive months.
• 3.ING projects Q2 consumer spending growth at 2.4% and GDP growth at 3% annualised.

Table of Contents

• Spending remains resilient
• Retail sales as a proportion of total consumer spending
• K-shaped consumer challenges linger

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