When it comes to the spectator sport known as the U.S. economy, there’s only one stat I really give a shit about: consumer spending. Jobs rely on consumer spending. Stock market performance relies on consumer spending. Corporate spending is an outgrowth of consumer spending. You get the point. Unless consumers are prying open their wallets, don’t expect much else to happen (except IT spending, which is up mostly because expenditures have been put off for too long).
Things looked good in August, when consumer spending was up 1.4 percent. But, it fell 0.5 percent last month, its largest drop since December 2008. According to Nigel Gault, chief U.S. economist at HIS Global Insight in Spending, “Consumer spending will probably continue to grow, but at a more subdued pace. After the 3.4 percent real spending growth in the third quarter, we expect consumption growth of 1 percent or less in the fourth quarter.”
Here’s the problem: this slowdown in consumer spending is going to hit the holiday shopping season. This, frankly sucks. If there’s only one consumer spending number I watch, it’s the holiday one. That’s what sets the tone for the year to come. It looks like holiday spending could be under pressure this year, but next year’s result should be better. We still have some work in front of us en route to a recovery. Keep your fingers crossed for the summer.