Investors Predict Huge Trouble Ahead For American ConsumersWill Kessler
Contributor
September 11, 2023 11:57 AM ET
The U.S. could see a recession in the coming year as a majority of investors predict a key driver of economic growth is losing steam, according to Bloomberg.
In a survey of 526 investors, 56% believed that personal consumption, a driver of economic growth, could decline early in 2024, while another 21% believed a decline would happen in the fourth quarter of 2023, with only 23% optimistic of not seeing a decline in the coming future, according to Bloomberg. Investors believe this is likely because high borrowing costs are eating away savings accumulated during the COVID-19 pandemic, leaving consumers to cut back on expenses.
“The likelihood of a soft landing, falling inflation, an end to Fed tightening, a peak in interest rates, a stable dollar, stable oil prices — all those things helped drive the market up,” Alec Young, chief investment strategist at MAPsignals, told Bloomberg. “If the market loses confidence in that scenario, then stocks are vulnerable.”
In the second quarter of 2023, personal consumption contributed to 68.3% of Gross Domestic Product, which serves as an indicator of economic growth, according to the Federal Reserve of St. Louis (FRED).
The U.S.’s personal consumption expenditure increase was reported to be 3.3% in July, rising from 3.0% in June but falling from 3.8% in May and 4.3% in April, according to the Bureau of Economic Analysis.
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