Consumer Spending: The Watch Pot Isn’t Boiling

We all tend be such number junkies at times that we forget or ignore the concept of 'statistical significance'. Price indices rise slightly, savings dip, employment figures get skewed by temporary census taking job loss, spending rises ever so slightly and so on. Yet we crave the data no matter how absurd it may be to draw conclusions from it.

"Consumer spending rose 0.4% in July from the previous month, the Commerce Department said Monday, after staying flat in June. Adjusted for rising prices, spending grew 0.2%", according to this week's WSJ. The headline reads "Cautious Consumers Step Up Spending Modestly" yet the column also states "Monday's report showed that personal income grew 0.2%. Private-sector salaries and wages grew 0.5%, but that increase was offset by a 10.6% decline in unemployment benefits, the result of Congress letting long-term benefits lapse in June. With those benefits reinstated, that drop will likely be reversed in August." And goes on to say "With spending outpacing income, the saving rate--the share of after-tax income that isn't spent -- slipped to 5.9% from 6.2% in June."

I know it's not Spend Matters' Friday Rant time, but the pot isn't boiling, the seesaw isn't really moving, and it isn't going to until we get people back to work in real jobs with a sense of responsibility, some benefits and the security that follows. So at the risk of understating the many complex issues that have landed us in this malaise, can we all think a bit more about re-investing some of those hard earned corporate dollars we've saved from smart sourcing, supplier risk reduction, spend visibility and the like, and look toward hiring unemployed talent for new initiatives?

A rising tide lifts all ships and every little gravitational pull matters – it can also establish a statistically significant trend.

William Busch

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