ECRI: Stealth Slowdown Unfolding Well Before Trade Tariffs

Danielle Park, CFA profile picture
Danielle Park, CFA
4.53K Followers

While stock bulls talk up a "strengthening" economy, consumer spending growth (which drives 70% of GDP in America) has fallen to a 4 ¼-year low even before rising trade tariffs are noted in backward-looking data.

The below chart from ECRI shows that the income shortfall relative to spending is increasing, and since 2015 the cumulative shortfall is over 1% of GDP.

This spending gap has been financed by already indebted consumers taking on even more debt and dropping their personal savings rate back near the historic lows that preceded the 2008 recession. This is the opposite of financial strength and resilience heading into an overdue economic downturn. See Stealth slowdown unfolding:

Lakshman Achuthan of the Economic Cycle Research Institute discusses consumer spending, the broader economy and more. Here is a direct video link.

Disclosure: No positions.

This article was written by

Danielle Park, CFA profile picture
4.53K Followers
Portfolio Manager, financial analyst, attorney, finance author, a regular guest on North American media. Danielle Park is the author of the best selling myth-busting book “Juggling Dynamite: An insider’s wisdom on money management, markets and wealth that lasts,” as well as a popular daily financial blog:www.jugglingdynamite.com Danielle worked as an attorney until 1997 when she was recruited to work for an international securities firm. A Chartered Financial Analyst (CFA), she now helps to manage millions for some of Canada's wealthiest families as a Portfolio Manager and analyst at the independent investment counsel firm she co-founded Venable Park Investment Counsel Inc. www.venablepark.com. For two decades, Danielle has been writing, speaking and educating industry professionals and investors on the risks and realities of investment behaviors. A member of the internationally recognized CFA Institute, Toronto Society of Financial Analysts, and the Law Society of Upper Canada. Danielle is also an avid health and fitness buff.
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