PLANO, Texas Consumer spending is still lagging during a still-tepid recovery, leaving Gross Domestic Product growth for 2013’s second quarter stuck at previously released estimates.
The third and final estimate for GDP growth during Q2 was left unchanged at a 2.5% annualized rate. This compares with the first quarter’s pace of 1.1%. The Commerce Department reports an upward revision in domestic sales offset a $6 billion downward revision in business investment.
Annualized economic growth continues at a 1.8% pace, slightly below 2012, but comparable to 2011’s growth rate. It is expected to increase to about 2.2% during the second half of 2013 and advance by 2.8% in 2014.
The news on economic growth and personal spending (increasing by 3.2+ %, while personal income increased 3.7% over the past 12 months) demonstrates the frailty of the recovery, according to Brian Turner, director and chief strategist at Catalyst Strategic Solutions.
Weak to moderate growth in consumer spending (two-thirds of the nation’s GDP) has a direct impact on credit union loan growth, particularly on consumer loans.
“When members continue to worry about their job security, they become hesitant to open their wallets, especially on big ticket items such as homes, automobiles and appliances all items for which credit unions extend financing,” noted Turner.
The Fed’s consumer spending gauge increased by 1.3% this year and is expected to increase 1.7% in 2014. Though not a significant increase, it supports the 2.8% GDP growth expectation for next year.
“This would imply a moderate increase in consumer loan growth next year,” added Turner.
New home sales reportedly increased 8.0% in August, while pending home sales fell by 1.6%.
