From Wolf Richter at wolfstreet.com:
The stagnation zone
Our ever exuberant US consumers spent on average $89 a day in March on “discretionary” items, according to Gallup’s Daily Tracking survey. That was up five bucks from February, which is within the typical range of seasonal increases. It matched the previous high for a month of March since the Financial Crisis: March 2013. In March 2014 and 2015, consumers spent less: $87 and $86 respectively. Flat for the past four years!
But March is a peculiar month, with strong predictive qualities for the entire year. Gallup:
For each of the past six years, the spending average for March has been a rough bellwether for that year’s spending, coming within $3 of the annual average. The months of April, June and October have come within this same range of the yearly averages since 2010. This did not hold true in March 2008 and March 2009, however — years in which the recession and the financial crisis dealt their immediate blows.
And just how flat have the past years been?
This chart shows the monthly averages going back to 2008, when the survey began. The plunge and spike in 2008 was followed by the collapse as the Financial Crisis hit home. Then spending gradually recovered until 2013, when, at lower levels than 2008, it became range-bound — a spending pattern that Gallup calls euphemistically, “fairly consistent since then.” The stagnation zone:
The March results are based on phone surveys of 15,243 adults aged 18 and older in all 50 states and Washington, DC. These folks are asked, among many other things, how much they spent “yesterday.”
When these results are averaged out month after month over the years, going back to 2008, while ignoring the impact of inflation – and there has been a lot of inflation in housing, health care, vehicle prices, tuition, and other big items – we get this:
If it were adjusted for inflation, it would look worse. And based on the results of March 2016, if historical patterns hold, this year will likely add another link to the stagnation zone.
To continue reading: This Shows Why Consumers Are Bogged Down
