As manufacturing slumps around the world, China reported an ‘official’ third-quarter GDP growth rate of 6% today–the weakest in about 30 years. Consumption made up a record 60.5% of that growth compared with 55.3% in the first half of the year. This compares with consumer spending making up roughly 70% of US GDP.
But with unemployment now coming off of record lows amid low savings, high debt, and manufacturing and business spending already in retreat, consumers will not be able to keep spending apace indefinitely. See Can Shoppers Hold Up Global Growth?
Last week, US retail sales unexpectedly posted the first decline in seven months, adding to a long list of warning signs piling up for the global economy and inflated asset prices.
A weaker U.S. consumer means recession risk can’t be taken off the table, says Lakshman Achuthan, co-founder of the Economic Cycle Research Institute. Here is a direct video link.
‘Yellow flag on recession risk’: Top forecaster warns of cracks in consumer spending from CNBC.
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