This is what happens when you have a gigantic debt pile weighing down your back.
According to Gallup, consumer spending declined across the board in August.
Here’s what Gallup says:
A year ago at this time, the U.S. economy was showing signs of having bottomed out. Americans’ discretionary spending had stabilised and began to show signs of modest improvement. While tepid back-to-school spending in August 2009 signaled moderate Christmas spending, people seemed to be getting somewhat more optimistic about the future, and upper-income spending showed signs of life in October and December.
This year, consumers — particularly upper-income Americans — started to spend again in May. However, the spending spurt was short-lived, with August spending returning to 2009 levels among both upper-income and middle-/lower-income consumers. In a sense, the current direction of consumer spending seems to be just the reverse of spending during this time a year ago.
This year’s somewhat disappointing back-to-school spending has been followed by few added expenditures for labour Day. Consumer spending for the week before labour Day averaged $61 per day — the same as during the prior week, and down from a $70 average during the same week in 2009.
Spending prospects for the next couple of months do not look much better, with Americans peppered by economic pessimism as the midterm elections approach. Many Republicans are talking about a lack of economic improvement. And the president is promoting new efforts to get the weak economy going. Neither party seems to hold out much hope for a significantly better jobs outlook or a surge in economic growth anytime soon.
On the other hand, no matter what happens in the elections, Americans could go on a post-election holiday spending spree. It just may be that a newly elected Congress could create some sorely missing economic optimism about the outlook for 2011.
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