Weekly Market Commentary 08/04/2017

Although parts of the U.S. economy are showing signs of fatigue, the job market continues to outperform expectations. This disparity was clearly evident in the latest batch of economic data. Earlier in the week, the government released disappointing figures on personal income and spending, indicating that the second quarter ended on a soft note. Not only did income and consumption come in weaker than expected in June, revisions to earlier data showed that income growth was much slower than thought in recent years and consumers financed considerably more of their spending by dipping into savings. With the revised savings rate more than one percentage point lower than previously estimated, and down about 2 percentage points since early 2016, households would appear to have less firepower to sustain consumption going forward.