Consumers Squeezed, Spending Stalls

As prices rise, wages fall and unemployment jumps, spending growth has stalled

By Clay Dillow, Newser Staff

Posted Oct 3, 2008 10:45 AM CDT

(Newser) – The current economic crisis is shaping up to be different than others Americans have weathered in the past 20 years in an important respect, the Washington Post reports: consumer spending, which the nation could always count on to propel the economy through, has stalled. Real spending, the catalyst behind 70% of GDP, has been flat or down since June, and economists predict the third quarter will show the first decline in spending since 1990-1991.

The consumer price index increased 4.3% in the second quarter compared to last year, at the same time falling wages, spiking unemployment, and dwindling credit were tightening purses. Even in the months after the 9/11 attacks and Hurricane Katrina spending grew 1-2%, but some economists predict a decline of 1-2% in coming quarters.

As the subprime meltdown continues to roil markets and the consumer price index climbs, consumers are fearful of parting with their cash. (AP Photo/Rich Pedroncelli, file)

Big ticket items saw a 27 percent sales decline in September as worried consumers hold on to their cash. (AP Photo/Mike Groll)

Jesus Esparza, right, and Julia Parmenova shop at a Wal-Mart Supercenter, Thursday, Oct. 2, 2008, in Rosemead, Calif. (AP Photo/Ric Francis)

A shopper strolls pass the ten dollar toys on display at a Wal-Mart Supercenter Thursday, Oct. 2, 2008, in Rosemead, Calif. (AP Photo/Ric Francis)

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Consumers Squeezed, Spending Stalls

As prices rise, wages fall and unemployment jumps, spending growth has stalled

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Q3 GDP Growth More Like 2.8% Than 3.5%

Spending and home prices are up, but not enough to help jobs

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Economy far worse off than statistics indicate

US Consumer Spending Falls Yet Again

1% drop greater than forecast; 6 straight months of decline

Wary Consumers Spell Trouble for Retailers

71% miss projections, worst showing since September of 2000

Wall Street Sneezes; Heartland Catches Cold

Worries about a recession are hitting home with Americans

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Consumers Squeezed, Spending Stalls

As prices rise, wages fall and unemployment jumps, spending growth has stalled

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OTHER STORIES ON OUR RADAR

Consumer Price Index • consumer confidence • wages • unemployment • consumer spending • GDP • credit crisis

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Q3 GDP Growth More Like 2.8% Than 3.5%

Spending and home prices are up, but not enough to help jobs

Forget the Rosy Stats: The Little Guy Is in Bad Shape

Economy far worse off than statistics indicate

US Consumer Spending Falls Yet Again

1% drop greater than forecast; 6 straight months of decline

Wary Consumers Spell Trouble for Retailers

71% miss projections, worst showing since September of 2000

Wall Street Sneezes; Heartland Catches Cold

Worries about a recession are hitting home with Americans

About Us

Site

Newser By Users

Community

Site Maps

Tools

More News

What is Newser?