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Thursday, September 16, 2010

Early Indications of September Consumer Spending

I've gotten in the habit of looking at the advance indicators of consumer spending as it helps to get a picture anywhere between half a month and a full month before the actual data comes out.

In September so far things aren't looking that good. Auto sales are on pace to drop from August, which was down a little bit compared with July. http://www.dailyfinance.com/story/autos/after-strong-start-u-s-auto-sales-slow-in-september/19637006/

On store front, it looks like sales are flattish from August so far, but they aren't down either. There's enough of the month yet in play to decide the matter.

From the MBA purchase index it seems that home sales will be at these heavily reduced levels for a little while yet. With high inventory levels, another 5-7% drop in home prices nationally seems quite likely over the next year or two. Most of the professional forecasts (Moody's, Global Insight, etc) are calling for something in that range now after being more bullish in the earlier part of this year. Evidently they were distracted by some of the tax credit induced price supports.

This activity suggests tepid consumer spending for Q3, though it was actually a little better than many were fearing and the data do not suggest a double-dip recession.

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