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Consumer Spending Falls For First Time in 28 Years

Published 10/31/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

For the first time in 28 years, personal consumption expenditures fell in the third quarter, according to the Commerce Dept. After years of increased consumer spending despite the economic environment, Americans appear to be finally reining in their frivolous expenditures.

Purchases of durable goods fell by 14.1 percent due to the limited availability of credit. Even spending on non-durable goods such as food and clothing fell by 6.4 percent.

In the wake of these statistics, Congressional Democrats are planning two more rounds of stimulus spending, with the goal of pumping $100 billion into the economy by the end of the year. The second round of spending is being planned for February. However, the Bush administration does not back the idea. Analysts say Democrats may be willing to go along with free trade agreements involving Columbia and Panama to sweeten the deal.

"The White House has some things they want, like Colombia and Panama. So I think the opportunity is there," said John J. Castellani, president of the Business Roundtable, an association of 160 of the nation's largest companies.

Source The Washington Post:

Through recession, countless natural disasters and a major terrorist attack, there has been one constant in the U.S. economy: American consumers have bought more stuff in any given quarter than they did in the previous one.

Not anymore. Personal consumption expenditures fell at a 3.1 percent annual rate in the third quarter, the government said yesterday, the worst decline since 1980. The data show that even before the financial crisis deepened in October, American households were being walloped to a degree that has no recent precedent. Conditions, economists said, are almost certain to get worse before getting better.

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