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Consumer Spending Finally Shows Signs of Life

By    |   Wednesday, 01 Dec 2010 07:13 AM

Even before Black Friday sales pulled shoppers into the malls, there were encouraging signs of life in the economy.

News reports indicate that retail sales were up slightly in stores, rose by double digits online, and that buyers were spending more on each purchase.

Discretionary spending has been on a little-noticed upward trend for the past few months.

During the summer, consumer spending fell dramatically. According to Consumer Metrics Institute, discretionary spending was off by almost 10 percent in July and August when compared to the summer of 2009. Still 5 percent below the level it was year ago, the trend is finally positive.

While most economists agree that consumers account for more than two-thirds of the U.S. economy, as measured by GDP, many economic indicators focus on industrial activity. Economists also tend to look at monthly, or even quarterly, data.

A nearly real-time indicator published by Consumer Metrics is the Daily Growth Index, which has been tracking consumer spending on a daily basis since 2004. Despite the short history, that time frame includes the end of the credit bubble and the Great Recession, two significant time periods.

Digging deeper, spending on travel is among the strongest components of the index.

Consumers may be celebrating the end of tough times with a long delayed vacation, or they may just be skipping mortgage payments and splurging while stiffing lenders.

We won’t know for a few months, but for now, we finally have some good news from consumers.

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MichaelCarr
Even before Black Friday sales pulled shoppers into the malls, there were encouraging signs of life in the economy. News reports indicate that retail sales were up slightly in stores, rose by double digits online, and that buyers were spending more on each purchase....
michael,carr,Consumer,Spending
246
2010-13-01
Wednesday, 01 Dec 2010 07:13 AM
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