FX.co ★ Weaker consumer demand signals warning for US economy

Currency strategists at Macquarie are flashing some warning signals about weaker consumption in the United States. Specialists are concerned about a significant difference between the growth rates of gross domestic product and gross national income in the country, not seen since the global financial crisis of 2008.

Macquarie fears that the US economy could fare worse than now. The current GNI rate, which shows the total income earned by the nation’s people and businesses, indicates a downturn in the American economy. At the same time, annual growth in GDP has consistently exceeded that in gross domestic income since 2007.

Recent data showed that US GDP grew at an impressive 5.2% rate in the third quarter of 2023. In theory, GDP and GNI should be equivalent but may differ due to some nuances in their calculation. Notably, GDP measures the total value of final goods and services produced in the economy, while GNI represents the total compensation of employees.

A considerable discrepancy between these indicators stems from negative public sentiment reflecting a slowdown in the US labor market. Despite the current situation, the country’s unemployment rate remains at historically low levels, although it has been up 0.5 percentage points since April 2023.