The One-Engine Economy

U.S. shoppers have been shouldering the economy, but they can’t keep bearing the entire load.

The Commerce Department on Friday reported that consumer spending was flat in August from July, the weakest monthly change since January 2015. Considering how strong spending has been this year, this shouldn’t set investors’ alarm bells ringing. But it may mark a transition into a slower-spending mode.

Consumer spending increased at an inflation-adjusted 2.9% annual rate in the first half of the year. With both government and business spending contracting, they were the only reason the economy grew at all. Income gains associated with healthy job gains were a big factor behind the spending increases and will likely keep powering things along in the quarters ahead. Healthier household balance sheets also have helped.

But other spending boosts look likely to fade. Gasoline prices, while low, are now only fractionally below their year-earlier level. Consumers’ ability to shift more spending away from the gas pump toward other items has diminished. Meanwhile, new vehicle sales have lately been leveling off as most of the car and truck purchases that people deferred in the wake of the recession have been made. Indeed, with car companies unwilling to lean excessively on incentives to boost sales as they disastrously did in the 2000s, Barclays BCS 3.58 % auto analysts think that U.S. light-vehicle sales will drift lower in coming years.

Goldman Sachs GS 1.46 % economist Zach Pandl sees two other reasons consumer spending may go “from great to good.” First, capital income—the income that Americans receive from dividends, rental properties, and the like—has been growing more slowly since 2015. And second, the gradual easing in credit standards that began in 2011 looks as if it has come to a close. Both of those things could put a bit less wind at consumers’ backs.

There are a couple of things that at the moment could help power the economy through slower consumer spending. First, companies don’t appear to be cutting inventories any further, so they will be boosting production to meet demand. Second, U.S. export growth has been outpacing import growth, so trade is providing a lift.

But any boost from trade or inventories probably only will be temporary. What would help more would be a pickup in capital spending from businesses and a more robust revival of the housing market. Absent those things—and so far, those things are absent—the economy looks like it will enter a lower growth trajectory.

Write to Justin Lahart at justin.lahart@wsj.com