Following the 2008 – 2009 Global Financial Crisis, U.S. consumers were in bad shape. Housing prices were depressed, many workers were out of a job, and household wealth declined sharply. For many years after the crisis, Americans paid down debts and worked to get their financial houses in order.1

Fast forward to the 2020 pandemic-induced recession, and the setup for U.S. consumers couldn’t look any different. This time around, debt levels have fallen, the personal savings rate soared, housing prices are shattering records, and wages are on the rise. About $6 trillion in stimulus money is swishing around, and more appears to be on the way.

After the Financial Crisis, China led the recovery with massive fiscal spending. After the pandemic-induced economic crisis, it’s the U.S. consumer leading the way.

U.S. Consumer Spending Has Jolted Higher, Pulling the Global Economy Higher

Source: Federal Reserve Bank of St. Louis2

Americans account for over one-quarter of all spending worldwide, with China far behind at 11%. For 2021, U.S. consumer spending is expected to rise 10% (year-over-year) after adjusting for inflation, which would mark the strongest performance since 1946.

Demand for U.S.-made goods and services is strong, but Americans also buy significant amounts of foreign-made goods. By some estimates, the U.S. will spend an additional $170 billion in imports each year for the next 5 years, and will also post a record trade deficit of $876 billion this calendar year alone.

For many countries, a strong U.S. consumer is an economic blessing, and U.S. fiscal spending is icing on the cake. Government spending in the U.S. is expected to lift GDP in Japan, China, and the eurozone by at least 0.5% in the next year, and perhaps even up to 1% in Canada and Mexico.

All of the additional spending is welcomed, but it also poses some challenges for businesses and non-U.S. economies. Many businesses currently do not have the personnel or production capacity to meet current demand, and supply chains are still facing bottlenecks. Surging demand for consumer goods is thus putting price pressure on a broad array of products and inputs, which raises the costs of goods globally. This price pressure poses a risk for the recoveries of other countries.

One example is the rising demand for personal computers. Over the past year, sales of personal computers (PCs) have risen by 50% or more each quarter, as workers set up home offices and as families acquired computers for remote learning. This demand has put immense pressure on supply chains for semiconductors, making them scarce in the global economy. Analysts predict even more PCs will be sold as the hybrid work model takes hold, and as home education becomes more commonplace.

In this sense, the U.S. consumer is largely responsible for price pressure on a consumer good – personal computers – and on the availability of semiconductors. The U.S. consumer is a force for good, but such strong demand also creates logistical challenges and dislocations across the global economy.

Bottom Line for Investors

The U.S. consumer is the most powerful force in the global economy, and all signs point to a strong year for spending.

But strong demand comes with risks and challenges: rising prices for consumer goods in countries where the economic recovery is still in early stages; businesses scrambling to increase production and hire enough workers to meet demand; wage pressures; and, scarcity of inputs in supply chains. These all represent good problems, of course, and in the months ahead there will be many opportunities for businesses to capitalize. From an investor’s perspective, finding those businesses is the key.


1 Wall Street Journal. June 28, 2021.

2 Fred Economic Data. June 25, 2021.


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