jmmx

Rate of Consumer Spending Decline Stabilizes - Overall Outlook Remains Grim

I really hate to sound the sour note, but I think we ned to take the conclusions here cautiously.

>> "Bottom Line: The latest ChangeWave survey shows the rate of U.S. consumer spending decline stabilizing"

First - this statement is a bit hedged. "the rate of... spending decline"
a) If you are at 10% negative spending level and change to a 12% level, that 2 percentage point change represents a RATE of change of 20% (2 is 20% of 10). Yet a move from 20% to 22% - the same 2 point change is now only a 10% RATE of change.
b) Obviously, as you approach saturation (100%), and 60% is approaching that point, then you can no longer continue to increase at a steep rate.

Second - There is nothing to say that the rate will not change again. If you look at the first chart, Apr- Aug showed a leveling off of sentiment, but was followed by a very rapid rise.

I would suggest that the recent rounds of huge layoffs, and ones that are bound to follow, will create an further increase in the red line of that chart (i.e. more people who are spending less). This will continue until we see a real reversal in the unemployment rate. The Obama team is dedicated to jump-starting the economy, but it will take time for legislation to be passed, implemented, and the work projects to actually begin. My guess is that any significant improvements in the survey will have to wait until the second half of next year -- and that if we are lucky.