Focus on the Consumer

By Andrew Paparozzi
In June 3, 2008

As expected GDP results for the first quarter were revised upward, but also as expected, the growth rate from the previous quarter remained under 1.0%—the second straight feeble increase. What are subsequent data indicating? Lets start with the consumer sector, which represents over two-thirds of GDP—71.5% to be more precise.

According to data from the Bureau of Economic Analysis, consumer spending adjusted for price changes was essentially flat in April, declining an annualized 0.1% from the previous month. Declines in purchases of both durable (-0.9%) and nondurable goods (-0.7%) were largely offset by a slight increase in services. On a year-over-year basis, consumer spending for the January to April period was up 1.8%—sharply lower than the 2.9% increase in 2007.

There is little question that the consumer sector has weakened considerably—battered by higher prices, especially at the pump and food stores, a dismal housing sector, and credit difficulties. Furthermore, during January-April, disposable (after-tax) personal income adjusted for inflation was up just 1.5% year-over-year—less than half the increase recorded in 2007. While the economy clearly is not getting much of a boost from the consumer, as of yet, the much-publicized worst-case scenarios have not materialized. So, where do we go from here? We’ll get a clue latter this week when the Federal Reserve releases data on household wealth and another big clue on Friday, when the Bureau of Labor Statistics (BLS) releases May employment data.

Joseph Vincenzino

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

Leave A Comment