Excerpt from Raymond James Economist Dr Scott Brown's latest economic commentary:
The Conference Board’s Consumer Confidence Index hit a 22-month low in September. However, as we’ve seen time and again, what people say and what they do are separate things. Confidence plunged after the September 11 terrorist attack. Yet, we had a record pace of motor vehicle sales just one month later.
There are three main drivers of consumer spending growth: income, wealth, and the ability to borrow. Wage income growth has been relatively strong over the last 12 months, and lower energy prices (relative to a year ago) have added to consumer purchasing power. More recently, crude oil has moved above $82 per barrel (NYSE:WTI) – yet, gasoline prices have not risen accordingly. If the average price of gasoline moves back much above $3.00 per gallon, consumer spending growth is likely to slow. However, aggregate wage income growth is still dependent on job growth. The trend in job growth is likely to be relatively lackluster over the intermediate term – below potential, but still positive.