The Consumer Spending Cliff

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This morning’s Wall Street Journal brings us our graph of the day, possibly the month.  Apparently the U.S. has already fallen off the consumer spending cliff.  From that article:

But even after taking Sandy into account, October data were disappointing. Retail sales and consumer spending both fell. Personal income would have risen without Sandy, but barely, the Commerce Department said.

Take a look at this graph (from the article linked above):

Consumer Confidence

Consumer Confidence

Consumer confidence fell by ten full percentage points between November and December.  Gee, I wonder what event happened that triggered such a decrease?  Oh, yeah, the election.  Voters may have elected President Obama, but markets are not happy.  Apparently consumers are not very happy either.  Real consumer spending (adjusted for inflation) fell slightly in October.  The November results will be reported on December 21.  Here are the most recent four months for the U.S.

JUL AUG SEP OCT
109.099 109.063 109.523 109.188

Not much either way there.  I predict a plunge in the December numbers — which won’t be available until January.

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About Tony Lima

Retired after teaching economics at California State Univ., East Bay (Hayward, CA). Ph.D., economics, Stanford. Also taught MBA finance at the California University of Management and Technology. Occasionally take on a consulting project if it's interesting. Other interests include wine and technology.