"Employment is looking firm, which is very supportive of spending. Faster wage growth would be the real silver bullet that's been missing."
- Oxford Economics
Consumer spending in the US advanced less than expected in February 2015, indicating that economy may be losing momentum after several quarters of strong growth. Personal expenditures gained 0.1% last month; however, it has been a first rise in three months, which followed a downward change of 0.2% and 0.3% in January and December, respectively. The worse-than-estimated result can be explained by cold weather and snowy winter in Northeast and Midwest of the country, which emptied malls and car dealers. Consumer sentiment, which is directly connected to future spending decisions, may considerably change the direction the American economy is moving in. Services sector is accounting for the biggest share of US GDP, with more than 70% of it depending on domestic demand. Still, climbing payrolls and falling unemployment are likely to have a general positive impact on the economy in the medium-term.
Another important topic, especially for US monetary policymakers, is incomes' growth. Last month salaries jumped 0.4% on a monthly basis, more than 0.3% projected by analysts and up from a 0.3% rise in January. Wages is one of the key issues for the Federal Reserve, which is going to make future decisions on interest rates, based not only on consumer price developments, but also on labour market situation and wage tendencies.
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