U.S. private consumption likely to be key economic growth driver in 2019-2020

U.S. private consumption is likely to be the main growth driver, averaging around 2.3 percent in 2019-2021, close to its annual mean since the financial crisis, underpinned by household balance sheets with early-cycle characteristics and strong labor markets, noted Scotiabank in a research report.

Average household combined principal and interest payments on accumulated debt account for the lowest share of personal disposal income in 40 years, while average household net worth is the highest multiple of PDI this century, said Scotiabank. Wages are rising at rates close to decade highs that are above headline inflation, led by high quit rates in comparatively tight labor markets.

“Personal consumption accounts for around 69 percent of US GDP and the key financial and labourmarket indicators that inform household spending decisions point to continued growth—despite the US economy being in the 11th year of a record-long expansion”, added Scotiabank.