Household Spending to Decrease for First Time in 16 Years

For the first time since 1992, U.S. household spending will likely decrease next quarter, according to Bloomberg News.

Analysts blame the waning effects of the $168 billion stimulus package, the surge in commodity prices - especially fuel and food - and the steady decline in consumer buying power as salaries fail to keep pace with inflation. They also believe that the odds of a recession occurring is more likely than not, putting the odds at 51 percent.

Spending is likely to grow at 0.6 percent through September, down from 1.5 percent the previous three months. The sharp decline is due to the fact that the impact of the tax rebates will be over by the fourth quarter of the year, as most remaining checks were sent out in July.

Source Bloomberg:

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