U.S. spending spree to end: Consumer spending expected to post its first decline in 17 years

[marmar]

from MarketWatch:



Consumer spending heading for a fall
Economist: 'Frugality is now replacing frivolity'
By Rex Nutting, MarketWatch


WASHINGTON (MarketWatch) -- With the stimulus checks just a memory, U.S. consumer spending is set to decline in the third quarter for the first time in 17 years, economists say.

The rebates were big enough to keep spending on the positive track in the second quarter, but U.S. households didn't spend nearly as much of the windfall from Washington as Congress expected. Instead, they saved it and used it to pay down debts heading into what could be a long winter.
Economists estimate that between one-sixth and one-fourth of the money was spent.

"Frugality is now replacing frivolity," wrote David Rosenberg, chief North American economist for Merrill Lynch, who suggests that the consumption patterns of the 1950s could be coming back. "Ozzie and Harriett" is in; "Sex in the City" is out.

The first official data on third-quarter consumption will be released in the coming week. In addition to the retail sales report for July, the calendar also includes July numbers for consumer prices and industrial production for July, and the June figures on foreign trade.

The data "should reinforce the view that the U.S. economy is in recession," said economists for Goldman Sachs.

The developing slump in consumer spending will make it increasingly difficult to sustain positive growth, said David Resler, chief economist for Nomura Securities. If the U.S. consumer falters, then global growth probably will too.

Consumers face three hurdles: Higher energy may be easing, but their wealth is still falling. And wage growth has been very weak. ......(more)

The complete piece is at: http://www.marketwatch.com/news/story/consumer-spending-heading-fall/story.aspx?guid=%7BD2B600B5%2DBE3C%2D4814%2DA302%2D6C17696F8ABB%7D

[alfredo]

1. It's better to be a citizen than a consumer anyway,

[arikara]

6. You said it...

I've always resented being called a "consumer".

[alfredo]

7. A cow is a consumer.

[Newsjock]

2. But at least those damn homosexuals still can't marry (*)

The real question: Will the "low-information voters" bother to do anything about their situation come Election Day? Come to think of it, how many of them will know there's an Election Day at all, let alone who the two candidates are ... or, worse yet, who their running mates will be.

My first inclination would be to call on all media to devote x% of their time/space until Election Day to educating voters about the issues and candidates. Then, I realize: Do I really want this screwed-up media to be a source of voter information?

(*) Offer not valid in Massachusetts and California.

[DJ13]

3. Depressions dont happen when people stop spending money

They happen when people no longer feel they CAN spend money.

This renewed "frugality" is dangerous territory for a country who's economy is 70% based on consumer spending.

[RC]

4. I thought it has been in decline for last 4 or 5 years already?

[gratuitous]

5. First decline in 17 years

Or, as I like to call it, the last time a Republican was on the out year of his term in office.