JPMORGAN: The ‘Slowdown In Consumer Spending Has Arrived’
Mar. 5, 2013
Last week’s release of personal spending data revealed that spending rose 0.2 percent in February, at the same pace as in January.
When adjusted for inflation, though, the data are less encouraging.
In a note to clients, JPMorgan economist Robert Mellman declares that the “consumer spending slowdown is here,” saying consumers are beginning to feel the effects of the payroll tax cut expiry and rising gas prices.
Slowdown in consumer spending has arrived: The first-round effects of the tax increases should mainly affect consumer spending, and the forecast looks for real consumer spending to slow to only 1.0% growth at a seasonally adjusted monthly rate this quarter. This forecast appears to be tracking. Real consumer rose only 0.1% at a seasonally adjusted annualized rate in January following a downward-revised 0.1% increase in December as well.