Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

For One Third of American's, Frugality is now the "New Normal"

Economics / Recession 2008 - 2010 Jul 22, 2009 - 11:34 AM GMT

By: Mike_Shedlock


Best Financial Markets Analysis ArticleA Gallop Poll of Americans’ future spending trends show One-Third Still Set on Spending Less.

Here are the results of the question: If spending more or less money, just your best guess, is the change in spending habits your new, normal pattern for years ahead or just a temporary change?

There is little variance between April and July. However, note that most of those expecting to spend more think it will be temporary, while most of those who will be spending less think it will be the "New Normal".

Given that tax hikes will hit the upper pay scales more and it is the middle to upper income ranges most devastated by the stock market and housing crashes, one might expect a significant falloff in spending in the middle and upper income groups. Such was not the case as those claiming to spend less are fairly uniform across all income groups as the following chart shows.

Multiplied across tens of millions of American households, even a small reduction in spending, perhaps coupled with a small increase in saving, could have a major effect on the consumer economy in the years ahead. And these data suggest that if one takes Americans at their word, there will be at least some shift in the nation's economy to a "new normal" of more restrained consumer economic activity for some time to come.

Spending Not Quantified

Wen it comes to spending, the poll does not quantify how much more or less. Nonetheless, it's significant that those willing to spend more are concentrated at the low end of the income scale ($30,000 and below).

Perhaps some low income workers expect a boost in the minimum wage to help. But if so, shouldn't it be permanent?

One in Four Americans Expect to Save More

The poll also showed that 25-27% expect to be saving more. Indeed the US Savings Rate Hits 6.9%, Highest In 15 Years.

In response to the above, I received many emails saying people were not saving, they were paying down bills.

The fact of the matter is: Paying down bills is saving. Similarly, putting money in the bank while racking up more debt is not savings.

For most wage earners, the savings rate is after-tax salary minus personal consumption expenditures (PCE).

By definition, the savings rate ignores interest income, capital gains, asset prices, etc.

Please see What's Behind The Soaring Savings Rate? for a more precise definition and further discussion of the savings rate.

Spending Patterns vs. Corporate Profits

Two-thirds of the economy is consumer spending and 50% of consumers claim they will be spending less while only 20% (concentrated at the low economic wage scales), think they will be spending more. Furthermore, most of those claiming to be spending more think it will be temporary, while most of those who think they will be spending less think it will be the "New Normal".

If it plays out that way, think corporate profits and the GDP are going to bounce strongly and stay up with those kind of numbers? If so, think again.

Target must be thinking again given they just canceled construction on a 185,000-square-foot SuperTarget store unless the developer agrees to rework the terms of the deal. See Moody's Commercial Real Estate Scorecard Accelerates To Downside for more details including grim hotels and industrial stats.

Consumer demand is not there and more importantly, it is not coming back. The implications are ominous for commercial real estate and the much hoped for recovery in jobs.

By Mike "Mish" Shedlock

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules