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US: Banking on an appetite to spend – ING

FXStreet (Delhi) – James Knightley Senior Economist at ING, notes that for all the negative headlines regarding global growth risks and the need for the Fed to delay hiking, it doesn’t appear to have impacted the household sector with the appetite for debt and spending looking strong.

Key Quotes

“Yesterday’s borrowing numbers offered further evidence that the US consumer is feeling confident enough to spend big in the build up to the holiday season. The Conference Board measure of consumer confidence had already confounded expectations of a sizeable fall following the recent equity market correction. It actually rose, with the current conditions component hitting an eight year high.”

“This bodes well for consumer spending in the final quarter of the year and should therefore be a major positive for GDP growth. Another positive is the housing market with weekly mortgage application numbers surging yesterday. Mortgage applications for house purchases jumped 27.4% on the week and are up more than 50%YoY, which points to strong property demand. This, in turn, should be good news for housing construction, which is already growing at double digit YoY rates.”

“With Treasury yields remaining under pressure as financial markets continue to doubt the prospect of Federal Reserve monetary policy tightening, mortgage rates will likely fall further, offering more support to an already buoyant property market. As such, the household sector looks in good shape to weather a rate hike should the Fed choose to pull the trigger at the December FOMC meeting.”

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