Market Commentary

Consumer Spending

Consumer Spending

The paycheck protection plan and increases in unemployment checks slowed or ended in July. We are just beginning to see the result. Consumer spending rose in July by 1.9% and incomes rose .4%. While neither of these numbers is a worry, one must be concerned with the slowdown in the growth of spending. The previous two months were well over 5% each, a very strong rebound from the severe collapse in spending in March and April caused by Covid-19.

An increase of 1.9% in the context of normalcy is high and would be celebrated pre-COVID as an outstanding number, but as it is, this signals a sharp slowdown of the economic recovery. We are still recovering but maybe at a much slower pace. The level of spending is about 5% lower than pre-COVID. We have a little more work to do.