US consumer shows confidence

“Concerns over US economic growth persist, and this highlights the importance of a global approach to investing in the developed and emerging markets.”

  • A latest survey reading of US consumers rose in May, after declining for three months in a row.
  • However, concerns over high prices, especially food and groceries, and high rates may impact US consumption later.
  • Investors may consider other international markets for attractively-priced asset classes.

US consumer confidence came in better-than-expected in May, rising for the first time in the past four months. This could partly be a result of improving sentiment among the high income earners. However, if we look at past few months, consumer confidence has actually been deteriorating. Looking ahead, high interest rates, inflation above the Fed’s targets and rising household debt could affect overall consumption. A large part of the US economy is driven by consumption and thus any fragility on this front may affect growth.

Already, we are seeing weakness in labour markets and rising consumer delinquencies on loans. Hence, to achieve their objectives, investors may consider quality businesses across the world to meet their long term goals.

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