Consumer spending, the key to the American economy, and by extension the global economy, is one of the most watched activities in the world, but results may vary, as they say, depending on who is doing the counting and what they’re counting.
The Gallup Daily tracking survey is one of those measures. The poll, based on telephone interviews of over 15,000 adults aged 18 and older each month, asks consumers the total amount they spent “yesterday,” not counting normal monthly bills and the purchase of a home or a vehicle. It’s Gallup’s measure of discretionary spending. And the results for August weren’t exactly what everyone had hoped for.
American consumers reported spending on average $94 per day in August. That was flat from July, though in the prior two years, there had been a marked increase from July to August. And it was down from $95 a day in August 2013.
During the Great Recession, Gallup’s measure of consumer spending hit lows between $60 and $70 a day, but since then, spending picked up with fairly consistent year-over-year gains. In May this year, spending hit $98 per day, a new post-crisis record (before the crisis, consumers averaged above $100 per day!). But in June, it dropped to $91; in July, it recovered a bit to $94, only to stall in August at the same level – now below where it was in August a year ago.
The trend of year over year improvements in spending appears to be running out of breath – or, as Gallup phrases it more politely, it “steadied at the higher levels reached in later 2013.”
That would be the definition of stagnation – not a propitious event in the US economy that is so dependent on eternal growth in consumer spending.
Who wasn’t carrying their weight? Higher-earning Americans. Consumers with incomes above $90,000 per year cut their spending in August to $157 per day, from $190 in July, and from $161 a year ago.
Below income levels of $90,000 per year, the picture is more mixed. These consumers, many of whom are spending every dime the make and can borrow, spent $80 a day in August, up from $75 in July, reflecting the month-to-month rise seen over the last couple of years. But that is still below the $82 a day they spent a year ago.
None of the consumer spending measures is very accurate, but the picture that is emerging is one where the consumer is hitting limits. And receding further into the background: the much hoped-for surge in consumer spending that would lead the economy to that elusive “escape velocity” that Wall Street economists have falsely promised for five years in a row to rationalize the soaring stock prices.
But fundamentals and economic realities having become totally irrelevant these days. So economists have been reassigned to tout stocks. Read…. Economist: Stocks No Longer Risky, Will Go Up ‘Steadily’