Hale Bonddad Stewart
In the first quarter of 2008, personal spending on durable goods decreased by 6.1% and personal spending on nondurable goods decreased by 1.3%. The only area of personal spending to increase was services, which increased 3.4%.
In other words, in the first quarter of 2008, people were buying less "stuff". And it's not just a decrease in one category but both categories of physical goods that raises my concern.
Going forward the key variable to watch will be job growth. Declining job growth means declining income, lowering confidence and thereby decreasing spending further.
All of this also means that if this trend continues (declining job growth leading to declining wages leading to declining sentiment leading to lower spending) the second half of this year might have some ugly surprises in store for us.
Reuters - The economy likely shed more jobs in April as the economy continued to weaken against the backdrop of a deeper deterioration in the housing market and a growing credit crunch.
Economists polled by Reuters ahead of the Labor Department report to be released on Friday at 8:30 a.m. EDT have forecast that the economy lost 80,000 jobs after losing the same amount a month earlier.
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