consumer spending down 0.3% in september?

[HootieMcBoob]

So, I just heard on NPR that consumer spending was down 0.3% for september. How can they be celebrating the economy being "charged" and "rocketing" and so forth? it looks like the economy isn't so good after all.

http://online.wsj.com/public/us

<on edit: corrected number from 3.2% which I had misheard in a radio broadcast to 0.3: and added wsj link>

[slappypan]

1. Incomes are up slightly

and consmer spending is down. People are trying to pay down staggering amounts of debt, which will take some time. Does not bode all that well for the Xmas season.

[zoidberg]

2. What was the source of that?

That number sounds fishy.

[slappypan]

3. 0.3%, not 3.2%

Consumers Pare Spending in September

"Personal spending fell 0.3 percent in September after hefty gains of 1.1 percent in August and 1.0 percent in July, the Commerce Department said, showing consumer spending losing momentum as the third quarter ended. Adjusted for inflation, spending was off a sharper 0.6 percent."

[zoidberg]

8. Thanks. That sounds more likely...

n/t

[NoMoreRedInk]

4. Spending was up 6.6% for the quarter that included September***

nm

[HootieMcBoob]

5. i misheard the report

spending was down in september by 0.3%. I've also included a link to the wall street journal with this information.

[JNelson6563]

11. some info on that

Consumer spending slows in Sept
By Rex Nutting, CBS.MarketWatch.com
Last Update: 10:11 AM ET Oct. 31, 2003

WASHINGTON (CBS.MW) - The U.S. consumer ended the bang-up third quarter on a down note.

Real personal consumption expenditures, adjusted for inflation, fell 0.6 percent in September after rising an upwardly revised 0.8 percent in both July and August, the Commerce Department reported Friday.

The decline in spending was the largest in a year.

On Thursday, the department reported that consumer spending for all of the three-month period rose at a 6.6 percent annual rate, the best growth in 15 years.

Meanwhile, real disposable incomes (after taxes) fell 1.2 percent, the sharpest drop in two years, as effects of the summer's tax rebate checks and tax cuts were unwound. For the entire quarter, real disposable incomes rose at an annual rate of 7.2 percent.

<snip>

"The weakness in September does not bode well for the fourth quarter," said Scott Hoyt, an economist for Economy.com. "Early indications suggest that auto sales are falling again in October and chain store sales have been weak, so spending growth will be weak this month as well, again making strong quarterly growth difficult to achieve."

"We need more job growth to get wages increasing faster so consumers don't have to depend upon refinancings and tax checks for their money," said Joel Naroff, president of Naroff Economic Advisers.

Lots more interesting info and links here:

http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=mktwsnap&guid=%7BE55C19B2-9422-4F68-B741-8C0FCB67BB9B%7D

Not only do the indispensable consumers get their $$ from tax bribes and refinancing their homes (often to the point of owing more than the home is worth--a recent, dangerous trend) but they have been the monkey in the wheel of this economy as it were. Both are limited, non-renewable resources and when they run out...well you can probably just run with it on your own imagining the dreadful possibilites.

There is no mystery where the "good" numbers came from. Unfortunately Jr can't just send out checks every quarter or so. Just another one-trick pony led out behind the barn and shot. The one-trick-pony stable is rapidly thinning....

Julie

[pansypoo53219]

6. so

when is that 'wonderful' GDP guesstimate gonna be reduced to 4.7?

[CMT]

7. a big indication of how the economy is

will be the Christmas season--if it is flat or only slightly better than last year, that will not be a good sign. The Third Quarter numbers on GDP up 7.2% was fueled in part by the tax rebates to people with children--and it is likely that much of that is used up.

[Lydia Leftcoast]

9. So was any of the "economic growth" fueled by

the results of companies that outsource many of their functions overseas?

Could we be seeing the profits from work outsourced to Mexico or China?

(My economics class was a couple of decades, so I'm fuzzy on this point.)

[ProfessorGAC]

12. Not Really, No

Much of it is fueled by two things: Increases in direct gov't spending (the GS in the GDP equation) mostly on the defense expenditures for the war.

The second is the backfilling of depleted inventories that were shed throughout the 2nd half of Q2. There are some HUGE firms that total >$400 billion in sales that have fiscal years ending 6/30. These firms typically shed inventory so that the balance sheet shows more cash and less inventory as assets and to create a strong cash flow statement. There's nothing wrong with this. It's valid both legally and from a biz point of view.

However, when they really do it strongly, as they did this year, they MUST backfill the inventory during Q3. So, they did and that created strong wholesale movement, but hasn't yet translated to consumer spending. It might not ever translate. We haven't passed the typical lag time, yet, so it's too soon to predict anything.

So, when you add these two elements together, it is an explainable phenomenon. That doesn't mean, however, that it's sustainable.
The Professor

[livinontheedge]

10. We can trash the economy all we want . . . the media whores are

spinning everything Bush's way. And as always, perception is reality for most people. Until the media stop celebrating, all the holes we poke in the economic picture amount to absolutely nothing (as far as the election in concerned). Also, CNBC reported the consensus economic forecast is for quarterly GDP growth for 4% or better through the end of 2004. Like it or not, reality or not, the perception will be that the economy is in full recovery.