Gallup has some sobering news about consumer spending: it might not be improving as much as we thought. In fact, it seems spending was virtually flat in January 2010 compared to January 2009. Since consumer spending makes up 70% of the economy in the U.S., if that doesn’t rebound, it will be hard for anything else to either. Let’s look at the data.
Here’s what Gallup shows for self-reported spending broken into two income segments:
For upper-income Americans, that’s an increase of less than 3%. For middle- and lower-income income Americans, that’s a decrease of 7%. As you can see, in both graphs 2009 also looked an awful lot worse than 2008. Gallup says that this could be a “new normal.”
I’m not sure about that. But this does show that spending isn’t really improving very much — if at all. It also reinforces the idea that the recovery probably won’t be particularly steep.
