To understand the reason, Morgan Stanley points to the headwinds consumers are currently facing — notably the burden of rising gas prices.
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Americans are facing a $50 billion headwind
Confidence is up, but spending isn't.
People fill up their tanks with gasoline at a Costco Gas Station in Carlsbad, California.
Data provided by AAA shows the average gallon regular of gasoline costs $2.284 a gallon, up from $1.698 a year ago. According to Zentner, "Annualized that is about a $50 billion headwind to the consumer wallet." She continued, "Data from the Energy Information Administration show that gas prices rose by more than 30% year-over-year in the latest week. Seasonally adjusted they increased by 8% month-over-month in December and an additional 4% in January."
The main reason for the increase in gas prices is low supplies from refineries.
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In other consumer headwinds, Morgan Stanley cites the pace of wage growth not fully offsetting the slowing trend in job growth, leading to a slowdown in real disposable personal income.
The team does not expect this to be a long-lasting trend, however, and thinks that the delivery of proposed tax cuts later this year will stem the slowdown in income. The Tax Policy Center says Trump's tax plan would reduce the average American's tax bill by $2,940.
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