Consumers Still Spending?
Posted By: 'Okie' | 10:11 am — 5/1/2008 | 
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When I looked at the page-one above-the-fold with “color graphs” LA Times article yesterday on Consumer Spending, the picture painted was bleak beyond all hope. As consumers step on the brakes, will the economy hit the wall? begins with:
For a generation, Americans snapped up clothes tailored to every demographic, bought the latest sport utility vehicles and piled on the wide-screen TVs.
No more. The nation’s long buying binge appears to be over. And that’s probably bad news for the economy.
Today, when the government issues its first snapshot of growth in 2008, the role played by U.S. consumers will appear smaller and faded compared with the past, when, year after year, their spending became ever more important to the economy.
“We’re at a watershed moment,” said Jay P. Feldman, an economist with Credit Suisse in New York. “The era of consumers living beyond their incomes is at an end.”
Wow! Sounds really bad. Then, this am I read in the Wall Street Journal this one: Consumer Spending Picks Up But Key Inflation Gauge Accelerates
Economic reports Thursday including a solid rise in consumer spending suggest the economy continues to avoid a severe downturn despite an eroding labor market and soaring food and gasoline prices.
How long it can withstand those headwinds remains under doubt, though, as a separate report showed a big jump in both new and continuing claims for unemployment benefits that signal another bleak employment report in April.
Meanwhile, a key inflation gauge for Federal Reserve policymakers also rose, further cementing the view that officials will hold interest rates steady in coming months.
Personal consumption increased by 0.4% in March compared with the month before, the Commerce Department said Thursday, double economists’ forecasts and up sharply from February’s gain. Spending slightly outpaced income growth, leading a dip in the saving rate.
Strong services spending offset a decline in spending on big-ticket durable items.
Consumer spending makes up about two-thirds of U.S. gross domestic product. So even small gains in spending can offset steep declines in other sectors like housing and business spending to keep the economy afloat.
OK, I’m no financial rocket scientist, far from it. But hey guys, which is it? I know what the LAT wants us to believe, and it’s no coincidence that viewpoint would be good for Obama or Clinton, and bad for McCain.
Hmmmmmm . . . what category to post this in? Yeah. That’s the one.
Technorati Tags: LA Times, Consumer spending
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