Posted on 03/05/2013 11:49:07 AM PST by blam
JPMORGAN: The 'Slowdown In Consumer Spending Has Arrived'
Matthew Boesler
March 3, 2013
TheRealMichaelMoore / Flickr
Last week's release of personal spending data revealed that spending rose 0.2 percent in February, at the same pace as in January.
When adjusted for inflation, though, the data are less encouraging.
In a note to clients, JPMorgan economist Robert Mellman declares that the "consumer spending slowdown is here," saying consumers are beginning to feel the effects of the payroll tax cut expiry and rising gas prices.
Mellman writes:
Slowdown in consumer spending has arrived: The first-round effects of the tax increases should mainly affect consumer spending, and the forecast looks for real consumer spending to slow to only 1.0% growth at a seasonally adjusted monthly rate this quarter. This forecast appears to be tracking. Real consumer rose only 0.1% at a seasonally adjusted annualized rate in January following a downward-revised 0.1% increase in December as well.
Moreover, the tentative forecast looks for real consumer spending to decline 0.3% in March. Nominal consumer spending does not appear to have cracked in February. At least this is the message from unit auto sales, which rose to a 15.4 million pace. But real spending in February will be depressed by a high inflation reading. The PCE price index for February appears to have increased 0.5% (and the CPI 0.7%), reflecting the increase in the price of gasoline.
The chart below provides a nice visual summary of what Mellman sees happening right now:
BEA, J.P. Morgan
On the other hand, Mellman points out that other economic indicators, like business investment, housing, and manufacturing, are all looking pretty good.
Consumer spending – not so much.
(Excerpt) Read more at businessinsider.com ...
Far as I noticed, the slowdown in consumer spending started in the first quarter of 2007. JP Morgan is a little slow in noticing.
Boy, if our economy was based on consumerism this would really suck.
Easy fix. The Pelosi school of economics dictate we send out more unemployment checks.
I think the 2012 numbers were manipulated up for the elections to prop up Obama. Now the numbers we being evened up. There is nothing logically different now from a year ago. Obamacare is in effect but rates have been going up for two years. Most of those impacts in 2013 are on business and those haven’t shaken out to significantly change employment rates. High gas prices? Yep, but we had ridiculous prices last year too. We should have seen the dip last year.
A lot of people thought Romney was going to win so kept spending in anticipation of better policies.
When Obama won, those people shut their wallets and that's showing up in the economy now.
Yep, and the Fed buying more debit and printing more money.
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