Ben and Dominique explore the growing fragility of the US consumer as falling real incomes and record-low savings rates threaten to stall the nation’s primary growth engine. They analyse the “skewed” nature of consumption driven by high-income households and how cooling core PCE data has assuaged immediate FOMC concerns regarding service-sector inflation. While upcoming labour data may signal a “Goldilocks” environment, focus shifts to underlying signs of economic weakness, such as rising unemployment duration, and Fed Vice Chair Jefferson’s more dovish stance on energy-driven income shocks. Dominique notes that a supply-side boost from relaxed immigration is currently tempering wage growth and maintains a forecast for a single insurance rate cut later this year.
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