In a recent posting on Yardeni.com, Ed Yardeni outlines some factors contributing to the current economic climate.

“In my opinion,” he writes, “consumers are doing what they do best because their real disposable incomes are growing along with employment and real wages.” He points out the following:

• Growing wages drive consumer spending, noting that President Trump’s policies or deregulation and tax cuts “undoubtedly contributed to the strength in personal income.”
• Uncertainty from trade wars and impeachment hearing: “On the other hand,” he writes, “Trump’s trade wars have created lots of economic uncertainty. So has his eccentric style of governing,” which has led to the impeachment hearing.
• Higher personal savings levels. Yardeni reports that the 12-month sum of personal saving rose by $335 billion from $969 billion as of November 2017 to a level of $1.3 trillion during August of this year. Over the same period, the personal saving rate increased from 6.5% to 8.1%.
• Income is outpacing spending: Real disposable personal income has grown faster than personal consumption spending since May 2017.

Yardeni concludes with, “I doubt that Trump’s lavish lifestyle is the role model for 99% of American consumers. The wealthiest 1% may be cutting back on their extravagant lifestyles and doing most of the saving, figuring that if Trump loses, they will be paying lots more in taxes.”