Following last week,’s announcement that the United States economy was bouncing back, with employment rising by 165,000 and unemployment dropping to 7.5, our Head Economist Richard Nicholls ponders the resilience of the US consumer and the potential impact this will have on the global economy…

Last week’s good employment statistics were the latest sign of resilience from the US economy and the American consumer.  Employment rose by 165,000 in April, well ahead of population growth; and while the number of government jobs fell by 11,000, the private sector created some 176,000 jobs. 73,000 of these were in professional and business services.

This follows good data on consumer spending in 2013. Despite the increase in payroll taxes as part of the fiscal cliff deal, and now the government cuts mandated by the Sequester, consumer spending has kept rising in real terms month-on-month (0.2% in January, 0.3% in February and 0.3% in March). This is despite aggregate real disposable income falling by 3% since the end of 2013, largely a result of tax increases.

What has happened? A fall in the saving ratio – this now stands at 2.7% as of March, down from an average of 3.9% in 2012. The American consumer so far has absorbed the payroll tax increase. (In contrast, the saving ratio in the UK is around 7%.)

The continued resilience of the American consumer will be crucial to global economic prospects – while more work is needed, there is growing evidence that the US economy is slowly recovering.  Only time will tell what impact this has on the global stage – but this could well be a time for cautious optimism.

For more US, UK or global economic data or predictions, including country-specific economic snapshots please contact the Future Foundation on 0203 008 4889.

The Future Foundation UK conference in November was a sold-out affair, as clients and guests joined us for a day packed with inspiration, ideas and commentary on the hottest new trends. Titled Hot Austerity, the conference focused on the (often ingenious) consumer coping mechanisms that have come to characterise the double-dip recession.

Before the doors had even opened, two of our senior researchers began with a breakfast summit session revealing our first ever wave of kids’ research, exploring the trends shaping the next generation of British consumers.

MD Meabh Quoirin and Account Director Barry Clark began with a deep dive into the top trends for 2013.  Top of the Charts were The Cult of The Home and how a quiet revolution is (re-)positioning the home as a hub for leisure and entertainment; a study of Gen Y – the most financially and digitally savvy generation with a strong tendency towards risk, financial nous and entrepreneurship; and Ish!, a brand new trend which sees consumers increasingly applying a transactional approach to brand relationships.

From our trend incubator nVitro came two emerging trends – The Hyper Individual and The Society of Sobriety, both giving glimpses of a post-recessional consumer, moving away from excess and into the arms of control and empowerment. Meanwhile, the Habit Interruptive session explored what’s new in the debate about consumer habit and ritual, particularly through the lens of Hot Austerity.  Nick Chiarelli examined why consumers develop habits, how loyalty and choice operate and how brands can interrupt the flow.

Our Chair Melanie Howard took to the stage for an interactive session, putting the spotlight on the future of work and inviting guests to visualise their versions of the workplace of the coming decade.  And James Murphy capped off with a full rundown of the economic outlook, essential for marketers operating in the double-dip doldrums.

For a full deck of slides or more information, please contact Karen Canty – karenc@futurefoundation.net

You can watch a highlights video as well as summary thoughts from each of the speakers: Hot Austerity – highlights from the Future Foundation conference

http://www.youtube.com/user/FFvision?feature=mhee

Martin Sorrell’s comment that four ‘grey swans’ are creating uncertainty in consumer markets and hitting agency revenues echo Future Foundation’s view that this is a time of unusual uncertainty for the global economic outlook. Sorrell commented that the Eurozone crisis, uncertainty about the US economy, the slowdown in emerging markets and tensions in the Middle East have spooked some of his clients into postponing spending plans as they wait to see if fortunes improve.

These grey swans, in contrast to Nassim Taleb’s genuinely unforeseeable black swans, are like Donald Rumsfeld’s Known Unknowns – we know what the risks are but we don’t know if they will be realised. There are plenty of rays of light visible for 2013 across Grey Swan Lake but the path is obscured.

In such a landscape we must take a broader view than conventional precise economic forecasting.

The double dip is over. The ONS preliminary estimate for GDP in Q3 was 1.0% growth; we’re out of recession.

Some key points:

• This figure needs to be read in context as 1.0% quarterly growth would ordinarily be very impressive. Some of this is a rebound from the poor Q2 figures (which were skewed by the extra bank holiday temporarily reducing output).
• The ONS says that 0.2% of Q3 growth is down to Olympic ticket sales alone (for national accounting purposes, these all counted towards GDP in Q3 even if you bought the ticket earlier). It is impossible at this point to quantify the size of the positive effect on GDP from other one-off spending associated with the Olympics like hotel bookings and sales of Happy Meals.
• So underlying growth is probably about zero. The size of the UK economy in Q3 2012 was essentially the same as in Q3 2011.
• Production and the service sector both showed growth but construction had another terrible quarter

Q3 GDP data for the Eurozone due out on 15^th November.