In the wake of the US presidential elections, the prospect of tax cuts, deregulation of the financial sector and infrastructure spending awoke animal spirits. Confidence indicators on the outlook for business among large companies, small business owners and consumers surged.
Yet the pace of economic growth slowed to just 1.4% quarter-on-quarter annualised in the first quarter of 2017. A slowdown is not uncommon in the first quarter as the statisticians often have difficulties with the seasonal adjustment of the data, but the tapering-off in consumption – caused by falling real disposable income – was irrefutable.
However, with a strong and tight labour market and further room for growth in the housing market, the US economy should rebound. Looking at these fundamentals, there is room for a solid growth trend in consumption to resume.
