The US economy has shown surprising resilience this summer, driven by consumer spending, rising company profits, and a trend of female empowerment boosting local businesses.
Strong economic growth: Reports indicate increased U.S. consumer spending, as GDP growth hit 2.4%, much higher than expected.
* Brands such as Coca-Cola, Hilton, and Visa have raised their earnings forecasts for the year, calling consumers “resilient” despite rising prices.
The ‘she-conomy’ effect: Spending in travel, dining, and entertainment sectors is high, with Taylor Swift and Beyoncé’s tours generating local business boosts.
* The Federal Reserve has noted the substantial impact of such tours on the hosting cities, with one analysis estimating Swift’s tour could generate nearly $5 billion in global revenue.
Corporate profits on the rise: Despite price increases, companies across various sectors report strong profit growth.
* For instance, Hershey reported nearly a 30% profit increase despite slightly reduced sales; both Coca-Cola and Pepsi experienced loyalty from consumers even after several rounds of price hikes.
Potential spending hangover: Consumers are relying on credit and depleting pandemic-era savings to fund their spending habits.
* However, increased wages due to labor market competition are also enabling higher consumer spending.
* The Federal Reserve Bank of New York has noted that credit card debt is at a record high.
Inflation and future outlook: Despite a recent slow down in wage increases and inflation at 3%, the Federal Reserve raised interest rates to a 22-year high.
* Economists hope for a “soft landing” where the economy cools enough to stop further price increases without causing job layoffs.
* The hope is high we could get there,” according to KPMG Chief Economist Diane Swonk.
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