Is the consumer recovery running out of steam?

The consumer outlook has dimmed slightly over the summer, suggesting that the economic recovery needs to become more broad-based if it is to gain momentum. The Q2 GDP breakdown showed that the quarterly pace of household spending growth slowed again. Admittedly, the hard data indicate that the consumer sector had a decent start to Q3, with the annual growth rate of retail sales volumes picking up in July to its strongest rate since last December. However, the consumer confidence index of the EC survey suggests that overall household spending growth slowed over Q3. Meanwhile, with the unemployment rate stuck at 11.0% in August, wage growth is set to remain slow and provide little additional boost to consumer spending.