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Lower- and Middle-Income Spending Lowest Since January '08
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| Contributor | particleman |
| Last Edited | particleman Oct 14, 2010 11:19pm |
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| Category | Poll |
| Author | Dennis Jacobe |
| News Date | Friday, October 15, 2010 05:00:00 AM UTC0:0 |
| Description | Lower- and middle-income Americans' self-reported average daily spending in stores, restaurants, gas stations, and online averaged $48 per day during September -- down $6 from August and $16 from July.
The decline in lower- and middle-income Americans' spending to new lows over the past two months may be a precursor of another significant drop in the overall economy. Gallup's self-reported spending data tend to measure consumers' discretionary or marginal expenditures, making these measures highly sensitive to shifting consumer spending patterns.
Gallup modeling suggests that lower- and middle-income spending is significantly more sensitive to job market conditions than is upper-income spending. In this regard, the September decline in lower- and middle-income spending may reflect the sharp increase in unemployment over the same period and continued high underemployment levels. Further, the lagged effects of continuing high and increasing unemployment are probably yet to be fully felt.
Given this context, the recent Federal Reserve discussions about another round of quantitative easing seem to make a lot of sense. The Fed needs to do everything it can to keep the U.S. economy from experiencing another decline in economic activity -- a so-called double-dip.
Regardless, Gallup's September spending and jobs data suggest that the possibility of a double-dip is no longer negligible. Congress needs to show the same sense of urgency as the Fed concerning what it can do for jobs and the economy when it convenes in its planned lame-duck session after the midterm elections. |
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