One of the biggest drivers of the so-called recovery (in addition to the Fed’s $4.5 trillion balance sheet levitating te S&P500 and the offshore bank accounts of 1% of the US population) has been the US consumer: that tireless spending horse who through thick, thin, recession and depression is expected to take his entire paycheck, and then some tacking on a few extra dollars of debt, and spend it on worthless trinkets.
Sure enough, for the past 8 years, said consumer has done just that and with the help of the endless hopium and Kool-Aid dispensed by the administration (who can forget Tim Geithner’s August 2010 op-ed “Welcome to the Recovery“), and by the political and financial propaganda media, spent, spent and then spent some more hoping that “this time it will be different.”
This all came to a screeching halt earlier today when courtesy of the latest New York Fed Survey of Consumer Expectations, we learned that the US consumer has finally tapped out. Households reported that they expected to increase their spending by just 3.5% in the next year, a major drop from the 4.3% the month before. This was the lowest reading in series history.
Worse, when adjusting for household inflation expectations, which have been relatively flat if modestly declining around 3%, real spending intentions, when adjusted for inflation, just crashed to a barely positive 0.5%, down over 60% from the prior month. This too was the lowest print in series history.
This post was published at Zero Hedge on 08/10/2015.