Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

The Slow Recovery in Consumer Spending

admin by admin
August 6, 2014
in Uncategorized
0
0
SHARES
2
VIEWS
Share on FacebookShare on Twitter

by Jonathan McCarthy – Liberty Street Economics, Federal Reserve Bank of New York

One contributor to the subdued pace of economic growth in this expansion has been consumer spending. Even though consumption growth has been somewhat stronger in the past couple of quarters, it has still been weak in this expansion relative to previous expansions. This post concentrates on consumer spending on discretionary and nondiscretionary services, which has been a subject of earlier posts in this blog.

(See this post for the definition of discretionary versus nondiscretionary services expenditures and this post for a subsequent update.) Discretionary expenditures have picked up noticeably over recent quarters but, unlike spending on nondiscretionary services, they remain well below their pre-recession peak. Even so, the pace of recovery for both discretionary and nondiscretionary services in this expansion is well below that of previous cycles. One explanation is that weak income expectations continue to constrain household spending.

The chart below shows the extent of the decline in real per capita discretionary services expenditures from their previous peak—a zero value in this chart indicates that expenditures are above their previous peak. Although the process has been halting at times, these expenditures have continued to recover from the extraordinary decline (more than 8 percent at the trough) during the Great Recession. In particular, the recovery over 2013:Q4 and 2014:Q1 has been sizable, moving from about 5 percent below the previous peak to about 3½ percent—among the more rapid improvements since 1959. However, it is also evident that the recovery in these expenditures still has a considerable way to go to return to pre-recession levels: 3½ percent below the previous peak is still considerably worse than the troughs of previous business cycles.

Cumulative Declines in Real Discretionary Services PCE

The picture is brighter than it was in the previous post in part because of the comprehensive revisions of previously released GDP data. The following chart illustrates the extent of the upward revision, which stems largely from higher estimated insurance expenditures.

Cumulative-Declines in Real Discretionary Services: Effect of the July 2013 Comprehensive GDP Revision

The next chart considers nondiscretionary services expenditures. The fall in these expenditures in the past recession was much less than that of discretionary services expenditures, and was not extraordinarily large compared with previous declines in nondiscretionary services. Even though nondiscretionary expenditures dropped somewhat in 2014:Q1—in large part because of the decline in health care expenditures in the quarter—these expenditures still have exceeded their pre-recession peak over the past several quarters. These patterns indicate that, consistent with the intuition behind these labels, households responded to severe income declines by cutting back on spending for discretionary services while maintaining spending for nondiscretionary services.

Cumulative Declines in Real Nondiscretionary Services PCE

The pace of recovery for both discretionary and nondiscretionary services spending has been unusually slow in this expansion. The charts below present an index of real per capita services expenditures that equal 100 in the quarter at the end of a recession—a measure that allows a comparison of this recovery to “fast” recoveries (the average of those following the 1973-75 and 1981-82 recessions) and “slow” recoveries (the average of those following the 1980, 1990-91, and 2001 recessions). The first chart shows that the pace of recovery in discretionary services spending trails the average slow recovery by a considerable margin. As of 2014:Q1, almost five years after the end of the recession, these expenditures were only 4.4 percent above their level at the recession’s trough. In contrast, at this point in the average slow recovery, these expenditures were 10.0 percent above the level at the recessions’ trough, and in the average fast recovery, 16.4 percent.

Real Discretionary Services PCE in Recoveries

Nondiscretionary services spending has also been sluggish in this expansion relative to previous expansions. The level of these expenditures in 2014:Q1 was 4.1 percent above the level at the last recession’s trough, compared with 9.2 percent for the average slow recovery and 14.4 percent for the average fast recovery at the same stage of the cycle.

Real Nondiscretionary Services PCE in Recoveries

The sluggish pace of recovery for both discretionary and nondiscretionary services expenditures suggests that the fundamentals for consumer spending remain soft. In particular, it appears that households remain—almost five years after the end of the recession—wary about their future income growth and employment prospects. Consequently, a positive resolution of these issues seems necessary before a stronger services and overall consumer spending recovery can be sustained.

Disclaimer

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Source: http://libertystreeteconomics.newyorkfed.org/2014/08/the-slow-recovery-in-consumer-spending.html#.U-IPc_ldVK4


About the Author

Mccarthy_jonathan

Jonathan McCarthy is a vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Previous Post

Market Commentary: Markets In The Green, But For How Long?

Next Post

What We Read Today 06 August 2014

Related Posts

Bitcoin Mining Revenue Rises 50% To $23M In A Month
Business

Bitcoin Mining Revenue Rises 50% To $23M In A Month

by John Wanguba
January 30, 2023
U.S. Inflation Roller Coaster Sparks New Outlook On Long-Ignored Money Supply
Econ Intersect News

U.S. Inflation Roller Coaster Sparks New Outlook On Long-Ignored Money Supply

by John Wanguba
January 30, 2023
Bitcoin Adoption Of Guatemalan Merchants Increases A BTC Tattoo At A Time
Business

Bitcoin Adoption Of Guatemalan Merchants Increases A BTC Tattoo At A Time

by John Wanguba
January 30, 2023
US Economy Recorded Robust Growth In Q4, But With Underlying Weakness
Economics

US Economy Recorded Robust Growth In Q4, But With Underlying Weakness

by John Wanguba
January 30, 2023
Morgan Stanley Fined Staff Up To $1 Million For WhatsApp Breaches – Source
Business

Morgan Stanley Fined Staff Up To $1 Million For WhatsApp Breaches – Source

by John Wanguba
January 30, 2023
Next Post

What We Read Today 06 August 2014

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe finance FTX inflation investment market analysis markets Metaverse mining NFT nonfungible tokens oil market price analysis recession regulation Russia technology Tesla the UK the US Twitter

Archives

  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Bitcoin Mining Revenue Rises 50% To $23M In A Month
  • U.S. Inflation Roller Coaster Sparks New Outlook On Long-Ignored Money Supply
  • Bitcoin Adoption Of Guatemalan Merchants Increases A BTC Tattoo At A Time

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish