A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Aug 21 2015

Fed Looks to Consumers to Enable Rate Hike

The Fed is on course to raise rates this year, and to do so they are counting on the resilient U.S. consumer to keep spending. As the latest Federal Open Market Committee minutes reveal, the Fed anticipates “consumer spending to rise moderately over the near term, [supported by] [c]ontinued gains in employment and income.” This sentiment is also shared by the consensus, following what many hailed as “robust” retail sales numbers for July.

In light of such optimism, we examine the outlook for consumer spending, using our U.S. Leading Index of Consumer Spending (USLICS), designed to anticipate cyclical turning points in U.S. consumer spending growth. The USLICS, therefore, already reveals whether consumer spending – through the holiday season – will be as solid as Fed and the consensus expect.

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