This one dates back almost 11 years to the day and addresses the fall-off in consumer spending back then, something we are starting to see here, particularly when inflation is eating away at people’s bank accounts and fuel prices are the highest in US history which also adds to the pain people are feeling today.
As with an earlier peek into the past, the original links in this post are dead so they have been removed.
Is this yet another bit of “unexpected” news?
Apparently consumer spending is down, again. It's at its lowest pace in two years and not getting any better.
While consumers haven't stopped spending, they are being more careful. They also have changed their spending habits, with more online spending and less in the way of trips to the mall. As one of Glenn Reynolds readers explained it:
I realize it is a cliche for a woman to say she has nothing to wear; but I have literally only bought one new item of apparel for myself in the past three years. I had a pair of shorts that was more patches than original cloth, so I determined I had to buy some new ones. But after three years of mall avoidance I found the idea of going to one to be impossibly fatiguing. So I checked Overstock and Landsend (sic) clearance and bought myself some new shorts for about $10 each.I can't remember the last time I went to one of the malls to shop. It's either WalMart or online shopping for us here at The Manse. If I buy something I know what it is I want, where I can buy it, and how much it costs. I know all of that before leaving The Manse (assuming I actually go to a store to buy what I need). Otherwise we buy it online.
But of course since I was online I just typed in women’s shorts and that’s all I bought. If I had been at a mall I would have found a cute top and an adorable little skirt and etc. etc. My shopping habits have been completely altered, and I think its a good thing.
One of the other things driving lower consumer spending is consumers paying off debt, getting those credit cards and car loans paid off. And when consumers do spend, they're paying cash or doing without. As Instapundit reader Robin Lyons writes:
Instead of spending, I have been taking all my disposable income and paying off debt. I have a good job and have disposable income every month. But I have decided that I am not buying anything not absolutely necessary in protest of the Obama economy. Not that my single participation makes any difference, but who knows how many of me there are out there?We've had a tight budget here at The Manse over the past two years. After a mortgage refinance at a much lower interest rate, we're paying off all of our other debt and freeing up $1000 a month or more because we won't have those payments. Our mortgage payments will remain the same and that's the only debt we'll have, one we're willing to carry. From this point forward we'll be paying cash or doing without. We'll keep one credit card (the one with both the lowest credit limit and lowest interest rate).
Even though reducing the number of credit cards we have to one may adversely affect our credit rating, the missus and I much prefer to limit our exposure in the future rather than worry about what Experion and the others credit bureaus might have to say about us. Freeing up $12,000 of cash a year makes me feel a whole lot better than worrying about our credit rating dropping 50 points. It seems quite a few others are taking the same route we have, at least from what friends and acquaintances have been telling me.
So the fact that consumer spending has dropped isn't a surprise to me or anyone else paying attention to the Obama economy.
At least this time I don’t have a mortgage to pay, my only credit cart has a $255 balance (which will be paid off tomorrow, it being payday), and I only have one more payment on the trusty RAM 1500 pickup (due next month), and I am out of debt. Yes, I still have a few outstanding bills to pay, but they are my regular monthly bills, things like insurance, utilities and the like. Yet, I am still cautious of my spending, and nervous about where our economy is heading – a recession – which would have been avoided if WRBA hadn’t decided to do everything it could to tank the economy. We’re right back where we were 11 years ago. Then again, remember who was Vice President 11 years ago...