The Bureau of Economic Analysis released the personal income and personal consumption numbers for January and they show that personal consumption, which makes up 75% of the economy is back to 2006 levels. I spent a few minutes creating a graph to show what the data looks like. Take a look:
So, consumers are spending like it's 2006. That's four years of lost spending, almost half a decade. Yes, spending is trending up, as you can see, but we had a pretty brutal reset in 2009 which wiped out quite a bit of spending. We're now recovering from a much lower level.
This is why it's hard to get very excited about a booming recover. And it's also why the stock market has petered out at the 10,000 range.
You can read the rest of the data, including the actual personal income and personal consumption numbers here.
Comments
Shorebreak
March 02, 2010
Unfortunately, the numbers released were based on same store sales data. There have been many stores that have closed or retail companies that have gone belly-up. So if there are less stores around, those still left would naturally show increased sales. Government figures only reflect the sales results at stores still in existence. To really see what is happening, look at what actual sales tax data shows in the various states. The sales tax revenues are sharply down for the same period. Thus, the happy-talk about the retail sales spending by consumers is not telling the whole story.
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