Hassett: Consumer savings funding investment boom
A shift in consumer spending is "funding an investment boom", according to the White House Council of Economics Advisers Chairman Kevin Hassett.
“The consumer, they are seeing their incomes go up a lot because of the tax cuts and because of deregulation and so on,” he told FOX Business’ Maria Bartiromo on Monday.
The U.S. economy grew by a better-than-expected 2.6 percent last quarter, largely in part due to solid consumer and business spending. However, Hassett said consumers aren’t as eager to shell out buckets of cash.
“They are not irrationally exuberant,” he said. “They are just plugging along spending about what the right amount of spending is.”
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But Hassett added that consumers are actually contributing to a "pretty reasonable" savings rate because they are saving more of what they earn.
“In the past you’ve sometimes have seen really strong 3 percent growth and there’d be lots of people borrowing to the max on their credit cards, consumer debt skyrocketing, housing prices skyrocketing and people borrowing against their houses,” he said. “And that kind of consumption binge would give us pause… but right now, that not what we are seeing at all.”
He added, “It’s hard to not think of a sweeter spot for the economy.”