It looks as if, little by little, US consumers are regaining some of their strength. But will they expend their new-found vigour by actually consuming, or will they dig down deeper into their bunkers?
The answer matters for the world economy. US consumption accounts for roughly 70 per cent of the country’s GDP and 15 per cent of the planet’s. This means that a 3 per cent contraction in US consumption would be the equivalent to the economy of, say, Colombia, simply disappearing.
The good news is certainly not ubiquitous. It comes in dribs and drabs. Household net worth took a nasty step down in the third quarter as property and share prices slipped. But yesterday’s private sector jobs report from payroll processor ADP was surprisingly robust (and will look even better if confirmed by Friday’s official jobs figures). It was accompanied by another tick down in initial jobless claims. In addition, delinquencies for many types of loan fell in the third quarter, according to the American Bankers Association. Consumer debt payments, as a percentage of disposable income, have reached lows last seen in the 1990s even while credit is expanding.