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Analysis

Lower rates may not provide much lift for consumer spending

Summary

Consumers went the full 12 rounds with the Fed in this cycle and never suffered a knockdown. But if higher rates were insufficient to slow consumer spending, why should lower rates be the magic elixir to make spending grow faster? 

We’ve begun our initial descent

Recent revisions to personal income and spending data put the U.S. consumer on firmer footing and suggest greater resilience in the household sector, but we do not subscribe to the argument that Fed rate cuts will suddenly inject new life into consumer spending. It is generally understood that the Federal Reserve adjusts interest rates with an eye toward balancing maximum employment with low and stable inflation.

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