The U.S. is no longer a manufacturing economy, and is instead a consumer based one where over 70% of the annual GDP is tied to consumer and government spending. So when this single component drops by even a small amount quarter to quarter or year to year, it creates a huge impact on the overall growth for America.
Which is why new data from Johnson-Redbook shows that consumer spending growth has fallen to levels not seen since the Great Recession (2009), and forecasts for the upcoming holiday season are expected to be the weakest in five years.
Upper middle-class shoppers spooked by a whipsawing stock market and shoppers waiting till the last minute for the best deals could result in the weakest U.S. holiday sales season for retailers since the recession, AlixPartners said.
The consultancy firm said it expects sales to grow 2.8 percent to 3.4 percent during the November-December shopping period compared with 4.4 percent in 2014, based on analyzing consumer spending trends so far this year.
This forecasted increase is on the low end of holiday sales performance since 2010, AlixPartners said in an advanced copy of a report given to Reuters. Holiday sales have averaged 3.9 percent in the last five years, the firm said. – Reuters
It has taken an independent auditor to provide the data that clearly shows this decline in growth, and validates the negative GDP the U.S. economy has experienced since the 4th quarter of 2014. Earlier this year, the government decided to change their models to now include a double portion of the nonsensical ‘seasonal adjustment’ variable, which revised GDP to 3.7%, and up from the original announcement of -.02%.
In other words, as of July 30, the Q1 GDP which will have seen its final print at -1% or worse, will be revised to roughly +1.8%, just to give the Fed the “credibility” to proceed with a September rate hike which means we can now safely assume not even the Fed will launch a “hiking cycle” at a time when the first half GDP will print negative (assuming the Atlanta Fed’s 0.7% Q2 GDP estimate is even modestly accurate). – Zerohedge
If reported accurately, the U.S. economy is either now in recession, or never truly left the downturn that took place after the 2008 Credit Crisis. And since the consumer is the most important data point for the entire fragile economy, it is no longer surprising why the Fed chose not to raise rates last week, because while their M.O. is to publicly give false and misleading numbers on how well the economy is doing, behind the scenes they realize that the system has only survived by their printing money, not contracting it.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.