U.S. consumers remain historically confident

The continued bright spot in global economic data has been the solid state of U.S. consumers. Unemployment is low, and consumers are confident and continue to spend freely, providing a major buoy for the rest of the economy.

What they're saying: "Trade, as important as it is, and as many headlines as it engenders, is 3-4% of GDP. Personal consumption is closer to 70% of GDP. And as long as the labor market is strong, wages are OK, and we’re in a non-inflationary environment, the consumer keeps spending," Scott Clemons, chief investment strategist at Brown Brothers Harriman, says in an email.

• “It’s good to remind one’s self about what the fundamental, underlying drivers of the economy are," Clemons said.

Of note: Both major readings of U.S. consumer confidence remain at elevated levels.

• However, the University of Michigan survey has been trending lower since May when the U.S.-China trade war began to escalate.
• The Conference Board's survey has remained near historic highs, with a measure of how consumers view their present situation at the highest since just before the 2000 dot-com bubble crash.

The bottom line: “The trade disputes are like waves crashing on the shore. The economic tide, driven by personal consumption, is still coming in," Clemons adds. "The risks of recession are way overstated, given the strength of the consumer."