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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 now 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.
And 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 due to the strong dollar.
This chart, which comes to us from Doug Porter and the team at BMO, neatly sums up the diverging fortunes of the US economy: exports down and consumer spending up. And on balance, this is great news for America.
"That stark dichotomy between the fortunes of consumers and exporters is playing out in a variety of stats and company results," Porter writes. "Despite the conflicting noises, just note that GDP is likely to grow 2.6% this year, its best year since 2006. The U.S. consumer remains a powerful force."
BMO