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Consumer Spending Flattens: Stagnation

Written by Gary North on August 9, 2013

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.

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7 thoughts on “Consumer Spending Flattens: Stagnation

  1. Gary, you gotta start spell checking!

  2. Rabelrouser says:

    The two economies of this nation stand in stark contrast, that of Wall Street and that of Main Street. Main Street normally accounts for cash flow in the nation, and right now, there is very little. Wall Street keeps creating its own, almost independent weath, amoungst itself.
    The general populace is not involved in Wall Street unless they are fortunate enough to have stocks, 401k"s, private pensions; but other than that life has become hand to mouth and trying to save what few pennies you can.
    Cost for daily goods keep rising through hidden inflation, that of higher prices for less quanity, and the paycheck is just not streching far enough.
    For people to save, they need to start a Third economy, that of bartering goods and services. The people need to economically help each other.
    The economy on Main Street is not going to get better, the government will not let it; it gives them a greater ability to control the populace.

  3. This is only “bad news” in economies that are spending-addicted like ours. Many Americans would prefer more leisure & downtime, instead of more spending. But that’s a no-no: you might spend your leisure lying in a hammock reading, tending a garden, doing something that doesn’t generate sales-tax revenues for the state.

  4. victorbarney says:

    PLEASE listen folks, our government now actually is playing the GAME of Monopoly & the GAME is about over! That's what I learned about the game of monopoly in Business education in the 60's 's the game of monopoly is now OVER! No? Tell me again in November "GATHERER'S." Watch!

  5. Yes, thee economie is never going recover , under are present administration . Referring to federal & state they've had plenty of time , has anything gotten better ? Oh yes the free hand outs from the Govern'mt they are the ones that elected him , Hello are they going to help thee economy !!!

  6. Consumer spending is flat? Well— duh?

    My car is almost an antique, literlly. I make more than 60% of the rest of the population. But I can't afford to buy a new one bcause taxes have gone up, food prices have gone up, gas prices have gone up. This is all due to Obasma's giant multi-trillion dollar deficit give-away financed by the printing press. I couldn't buy anew care today even if I could py cash, because within six months, I might need the $30,000 I spent on the car to buy a loaf of breat to eat that night.

    All Obamanomics is about if fear — fear of inlfation, fear of confiscatory taxes, fear of currency collapse, fear of collapse of industry and small business, fear of the collapse of Social Security with al the tax moeny i was forced at gunpoint to put money into for the last 4 decades. and fear of rsiing costs of cheesy (but expensive) ggovernment-controlled heatlh care that willl simply pull the plug on anyone onver 50.

    Thse days, being an American citizen today who d doesn't serve in Congress or work for a federal agency is like being on a ship captained by Bernie Madoff.

  7. 1baronrichsnot1 says:

    It went to less than flat, you can't get anyone to buy anything, they have no jobs, on disability, no home, junker cars, and maybe if lucky a part time job. You can't sell into that economy! You have to be kidding, if you say you don't know what is wrong. The gov't lies, lies, and lies, then lies more! What recovery! Where is it? looks like 25% unemployed to me! Poll that, don't take their word for it. Ask them how many have part time jobs. How many have full time jobs.