Did US Consumer Spending Just Hit Its Peak?
Americans are having to dig deeper into their pockets to finance their shopping and their wealth is dropping. That does not bode well.
Lines could get a lot shorter.
Photographer: David Paul Morris/Bloomberg
The big economic news of the day was that real consumer spending rose in April by the most in three months, helping to push the S&P 500 Index to its biggest weekly gain since March. At first glance, this may be seen as a sign of resilience on the part of consumers despite the highest inflation rates since the early 1980s. Perhaps, but it’s not encouraging that consumers are having to dig deeper into their pockets to finance that spending.
Commerce Department data released Friday showed purchases of goods and services surged 0.7% in April from March after adjusting for higher prices. Over the past year, only the 1.5% gain in January was bigger. Such strength should temper talk of an imminent recession, especially because consumer spending accounts for about two-thirds of the economy. What’s worrisome is that the personal saving rate took another big dip, dropping below 5% for the first time since 2009.