Will Thursday's Job Reports Impact Consumer Spending?

Consumer spending for the month of September rose 0.5 percent from a month earlier, which exceeded the 0.4 percent growth economists surveyed by the Wall Street Journal were expecting.

The Wall Street Journal further noted that personal-consumption expenditures rose at a 2.1 percent pace in the third quarter, which does mark a deceleration compared to the 4.3 percent growth seen in the same period a year ago.

Meanwhile, private sector employers created 147,000 jobs in October, a figure that fell short of expectations of 165,000 and also fell short of the 202,000 jobs created in September.

Initial jobless claims data were released on Thursday, which also fell short of estimates. According to government data, initial jobless claims rose by seven thousand to 265,000 which exceeded the consensus estimate of 258,000.

Third-quarter productivity and costs rose 3.1 percent compared to expectations of a 2 percent gain. Unit labor costs rose 0.3 percent, which was short of the 1.3 percent gain that analysts were expecting.

Consumers Account For 60% Of GDP

Scottrade's senior vice president of brokerage products, Joe Correnti, told Benzinga in a brief interview that consumers are responsible for around 60 percent of the total GDP.

Correnti also noted that if consumer spending "trickles" then it will be hard to replace the impact of their spending.

A string of lower than expected employment data points could eliminate some of the consumer spending and the government won't be able to fully mitigate the tapering.

Correnti continued that government spending is "easy to predict" based on budgets that require approval and any government help to boost GDP amid a weakened consumer "should not be counted on for much impact, despite it being an election year."

Finally, Correnti stated that business investments also tend to follow consumer behavior so investors shouldn't count on corporations to account for any decline in consumer spending.

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