Federal Reserve press conference, 2015-06-17 — Chair Janet Yellen

Question (Christopher Condon, Bloomberg): Thank you. Chris Condon from Bloomberg News. Madam Chair, I’d like to come back to the topic of consumer spending. Consumer spending has been very disappointing for many months in the U.S. economy. I’m wondering, do you think there has been a meaningful shift, and one that will persist in the behavior of households, with respect to spending and savings? Or would you be more inclined to look at the recent more encouraging retail sales figures and see perhaps a return of the American consumer there?
Answer: So I think in recent weeks we have received data that suggest that consumer spending is growing at a moderate pace. I’d say, you know, car sales, for example, were very strong. Part of it probably represents payback for weak sales during the winter months, but, nevertheless, the pace of car sales has been strong. And recent readings on retail sales and on spending on services have suggested an improvement in the pace of consumer spending. There are questions at this point about just how much impact we’ve seen of lower energy prices on consumer spending. The decline in oil prices translates into an improvement in household income, on average, of something like $700 per household, and I’m not convinced yet by the data that we have seen the kind of response to that that I would ultimately expect. And I think it’s hard to know at this point whether or not that reflects a very cautious consumer that is eager to add to savings and to work down borrowing. Or, in part, some survey evidence suggests that consumers are not yet confident that the improvement they’ve seen—the decline in their need to spend for energy, for gasoline—that that’s going to be something that will be permanent. They may think it’s a transitory change and not yet be responding. So I think the jury is out there, but I think we have seen some pickup in household spending.