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
Consumers Squeezed, Spending Stalls
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)

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.
(More consumer price index stories.)

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