Strong consumer spending ‘does not preclude US recession’
Dallas Fed research argues that declines in residential investment are a better bellwether for a downturn
Strong consumer spending in the US does not preclude a recession, argues research by the Federal Reserve Bank of Dallas.
A new paper, written by Alexander Richter and Xiaoqing Zhou and published on January 2, states: “In every recessionary episode since the 1960s, consumption grew in the two quarters before.”
The authors say that during previous recessions, falling consumption was not the main driver of declines in GDP.
Consumer spending currently represents around two-thirds of GDP in the US
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