Upper-income spending at $126 per day in May, down from $145 in the same month last year
PRINCETON, NJ -- Overall self-reported daily consumer spending in U.S. stores, restaurants, gas stations, and online averaged $69 per day during May -- up from $65 in April, but not as good as the $72 average of May 2010.
Consumer spending over the first five months of 2011 has followed a pattern similar to that of 2010. Spending in both years has been far below that of 2008.
Upper-Income Americans Spent Less This May Than Last
Upper-income spending (among Americans making $90,000 or more annually) averaged $126 per day in May, down from the $145 of the same period in 2010. While these Americans have the disposable income to spend more freely when they choose, they continue to hold back. Upper-income spending during the first five months of 2011 has been highly consistent with that of 2010.
Lower- and Middle-Income Spending Continues in New Normal
Lower- and middle-income Americans' self-reported spending averaged $59 per day during May -- essentially the same as during the prior two months. These Americans, who make less than $90,000 a year, have so far in 2011 spent at levels similar to those of 2010.
Despite the surge in economic confidence Gallup measured after Osama bin Laden's death and the benefit of two weeks of modest declines in gas prices, U.S. consumers are spending no more in 2011 than they did in 2010. Upper-income consumers in particular seem to have pulled back on their spending, erasing any thought of the "frugality fatigue" seen in May of last year.
This finding is consistent with other economic data suggesting the U.S. economy is experiencing a so-called soft patch. The Chicago Institute for Supply Management report released Tuesday shows a slowdown in manufacturing, and the Case-Shiller Index reports lower year-over-year home prices -- implying housing may not have reached bottom. It is little wonder that many economists are lowering their forecasts for the economy in 2011.
The question going forward is whether the current slowdown is simply transitory, as suggested by Federal Reserve Board Chairman Ben Bernanke, or something indicative of economic stagnation or stagflation. At this point, the answer is unclear.