The US economy is all about consumers.
On Tuesday, consumer confidence beat expectations while advance data on US trade in August showed a 3.2% decline in the nominal value of exports, which are down 10.4% over the prior year.
The decline in exports reflects a hit from the twin impacts of a decline in oil prices and a strong US dollar. For US consumers, however, these are major tailwinds.
So despite the downbeat news on exports, the US economy still remains poised to grow 2.6% this year, which would be its best year since 2006 as the economy’s most powerful force — consumers — enjoys the spoils of low oil prices and more purchasing power because of the strong dollar.