A Gallup pol, reports that U.S. consumer spending went flat in July. The poll revealed a pattern that has gone on for five months.
We know that the economic recovery is stalled. This is reflected in the poll data. The report is published here: http://bit.ly/14zaUm9.
This was a major poll. Gallup polled 14,000 people, July 1-31. This is ten times the typical polling sample. We can be confident in the results.
If this slowdown leads to increased thrigt, then it is good news. But there is no indication that this slowdown in spending had led to increased thrift.
Upper-income Americans have also stopped spending, February to July. This is across-the-boards stagnation.
Spending was up in the East in July, likely related to the Wall Street boom and improving conditions for financial institutions. Spending, however, declined in the South — possibly related to some slowing in the energy industry in this part of the country during recent months. It dropped as well in the Midwest, which seems to be suffering from a continuing slowdown in manufacturing.
In short, Wall Street is doing well. Main Street is not. This had been the recovery’s pattern.
Even as Wall Street is reaching new record highs, questions remain about the strength of the Main Street economy. Gallup’s self-reported spending results for July suggest the underlying economy remains fragile at best. This aligns with recent weak GDP reports, the lack of increase in full-time jobs with employers, the slight decline in economic confidence, and Friday’s mixed, but also relatively weak, Bureau of Labor Statistics jobs report.
The reason spending hasn’t in fact declined over the past several months may be that the Federal Reserve’s efforts to flood the economy with money have not only been supportive of Wall Street, but also bolstered durable goods values in general, including housing and autos.
Still, at this point, Gallup’s economic data do not support the idea of a significantly improving U.S. economy in the second half of the year. In turn, this suggests retailers may be disappointed with the Back-to-School spending season. The consumer spending outlook appears best in the East and the West, OK in the South, but not so good in the Midwest.
This is a big bank recovery. The Federal Reserve has taken care of its constituency. As for the rest of us, it’s catch-as-catch can. It’s devil-take-the-hindmost.