Wells Fargo forecasts modest consumer spending growth in July, driven by steady income gains despite waning tax refund support.
US consumer spending likely rose 0.2% in July, supported by a 0.3% increase in nominal personal income, according to economic forecasts. The gain reflects steady underlying demand, though distortions from lower gasoline prices and a shift in online sales events weighed on headline retail figures.
Excluding volatile components, control group sales excluding nonstore retailers climbed 0.4%, slightly above the six-month average. However, the fading impact of larger tax refunds leaves spending more dependent on income growth, which is expected to remain stable amid a resilient labor market.
PCE inflation is projected to ease gradually, with both the deflator and core PCE slowing but remaining above the Federal Reserve’s 2% target. Real disposable income is anticipated to improve modestly in the coming months if labor conditions hold steady.