May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis, Gallup Survey Finds

Tyler Durden's picture

It may not have the clout of the official monthly Dept of Commerce Retail Sales report not due out for two more weeks, but in retrospect considering how many credibility issues with seasonal adjustments government data has had in recent months, the Gallup Consumer Spending report may have become far more realistic than official government data.

In which case all hope of a Q2 GDP rebound abandon, ye who read this: after a strong April, in which the average consumer reported a daily spend of $91, $3 higher than a year prior, and the highest spending month since before the great financial crisis...

... in May things quickly deteriorated, with average daily spending in April and May unchanged at $91, despite a consistent jump the just concluded month of May in recent years, and despite the substantial jump in gas prices, which in May 2008 led to a $28 jump in average spending, and $10 in 2014.

Worse, on an apples to apples, year-over-year basis, average spending in May of 2015 was $7 less than 2014, and nearly identical to 2013, when the US unemployment rate was nearly 3% higher, and the economy was supposedly sputtering badly enough for the Fed to launch QE3.

Finally, as the chart below shows, this was the biggest month of May consumer spending drop in nominal dollar terms since the 2008 financial crisis.

 

This is what Gallup does to calculate average spending:

Gallup's daily spending measure asks Americans to estimate
the total amount they spent "yesterday" in restaurants, gas stations,
stores or online -- not counting home, vehicle or other major purchases,
or normal monthly bills -- to provide an indication of Americans'
discretionary spending. The May 2015 average is based on Gallup Daily
tracking interviews with more than 15,000 U.S. adults.

What it found is that last May's spending level has largely gone unmatched since, except in
December 2014, when spending also averaged $98. However, Americans
typically spend more in December because of holiday shopping. Still, the
latest monthly figure is higher than what Americans spent each May from
2009 through 2013. By contrast, Americans spent an average of $114 in
May 2008 -- prior to the global financial meltdown later that year that
both deepened and prolonged the U.S. recession that started in late
2007.

But the punchline is that while the long awaited, and now long forgotten "gas savings" from the drop in crude, which in california is rapidly approaching an unchanged Y/Y print, never materialized in a jump in actual spending as today's latest disappointing consumer spending data confirms, now that gas prices are rising consumer are retrenching even more!

Quote Gallup:

The stagnation in Americans' spending may be related to gas prices, which continued to rise last month -- though they are expected to plateau and eventually dip as the year progresses. Confidence in the economy also dipped, with lower weekly measures in May than in April. Gallup has found that Americans' perceptions of the economy are related to gas prices, and what they pay at the pump certainly influences how much they spend overall and how much they have left for discretionary purchases after they take care of the basics. If gas prices do stabilize, this may enable Americans to spend more on other things.

 

While Gallup's historical spending averages have generally been higher in the spring and summer months than in the winter, spending usually dips or stays flat in June compared with May. With consumer spending the major driver of U.S. economic growth, healthier spending in June could help keep the economy on a strong track toward recovery after a disappointing first quarter that saw the economy shrink.

Or, should May's weaker than expected trend persist into June, then one can forget all about a second quarter GDP rebound. In fact, while Q1 GDP was saved to the tune of 2% from a surge of inventory accumulation, in Q2 this won't repeat, and in the meantime, personal spending is starting off quite poorly and on the wrong foot. Should there be a comparable Y/Y decline in spending in June as well, it is virtually assured that Q2 GDP will also be negative.

Which would mean that the US has officially entered recession just as the Fed is timing its first rate hike in one trading generation.

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OC Sure's picture

The government seems to be consuming a lot. 

espirit's picture

Damn the savers!

Do I really need a [sarc] tag?

MonetaryApostate's picture

Savers? HA!  People are fooking broke man, even the stOOpid gov... :D

90% of Americans don't even have a lick of financial education...

Achilles Heel's picture
Achilles Heel (not verified) Jun 1, 2015 7:13 PM

I haven't spent this little, like a synagogue mouse... Since Lehman!!!

ebworthen's picture

Obamacare deadline for enrollment not long before this.

$95 Penalty last year, $395 or 2% of your income, whichever is greater, for not paying your tribute this year.

espirit's picture

Ha ha.

They can take it from my reFUNd.

kaiserhoff's picture

Most of the yutes I know have exactly that attitude.

Not good news for the cash flow of a desperately stupid project.

OldPhart's picture

I helped my daughter in law with her economics homework.  One of the things we did was go to CoveredCalifornia (ObamaCare) and put in minor assumptions.  Two working people making a combined $80k with a 1 year old child.  There is no subsidy for that level of income so the premium ran about $663 a month for the mid-range basic coverage (paying 60% with a $12,500 family copay and something like $6,000 deductible.)  Premiums and potential out of pocket costs ran to $26,000.  2% on 80k is $1,600.

This scam was made to crash.

BeerMe's picture

Assuming you even file.

Hubbs's picture

Hah hah hah. I've been spending all right ...on gold and silver, where according to some, fiat currency goes to die, out of circulation, out of banks control, to sit, and sit, and sit. 

To the "religious"fanatics out there, it's almost like waiting for the "second coming" financially -after currency resets when maybe, just maybe, gold will come back as money. But then again, haven't a lot of lives and prosperity been lost over religion?

Kaiser Sousa's picture

"Finally, as the chart below shows, this was the biggest month of May consumer spending drop in nominal dollar terms since the 2008 financial crisis...."

well dammit, i gonna do my part to help out this dead economy and non-existent "recovery"....

buyin Silver this week...

hee....hee...

DEATH TO THE MONEYCHANGERS.

foodstampbarry's picture

Lies! Steve LIESman knows his shit and he's got my back.

FSFT's picture

Does buying ammo count?

i_call_you_my_base's picture

Everyone bought all of the things.

Seasmoke's picture

Damn Saving Terrorists.

FreeShitter's picture

Been as cheap as a motherfucker all year. Buying what I have to and with coupons, promotion codes, and the like.

Stormtrooper's picture

Hey Yellen, you've made all of these plans to normalize, if such a thing can exist with central planning, so let's get the party rolling.  Let's do it in 5% increments for a couple of Fed meetings.  Man up and prove that you have just as large a man-member as Volcker.  Volcker got to 18%.  Prove that you can outdo him with 20%.  That "Greatest Depression" is just playing a game of chicken with you.  Prove that you are willing to not swerve at the last moment.  It will make your place in the history books.

Ajax_USB_Port_Repair_Service_'s picture

They are including those government ammo purchases in the Consumer Spending report.

ajkreider's picture

Still waiting for the downside of lowering revolvimg credit.

Oh for the halcyon days of 2008, when spending was underpinned by home equity loans at twice the real home value. It's like pining for those years in college you spent drunk off your a$$, and then flunked out to live in your parents' basement.

jim249's picture

Gallup's daily spending measure asks Americans to estimate
the total amount they spent "yesterday" in restaurants, gas stations,
stores or online -- not counting home, vehicle or other major purchases,
or normal monthly bills -- to provide an indication of Americans'
discretionary spending. The May 2015 average is based on Gallup Daily
tracking interviews with more than 15,000 U.S. adults.

$91.00 a day? I am lucky to spend that much in a week!

LooseLee's picture

I've never had a call by any of these fascist gov't. record keepers or any others and I'm 54 years old and been in the USSA all of my life. I think they only call people in the top 10% or thereabouts.

Gab Timov's picture

" could help keep the economy on a strong track toward recovery "

Yeah. Seven years post Great Recession and we're still trying to get on track towards recovery. Oooh, it's right over that next hill. I can see it! And there's a lake there too! And palm trees. Almost...there...so...thirsty...what are those vultures doing?

glenlloyd's picture

I know...people keep saying that word: recovery, like there is one...lol. Either that or they think the more they say it the more it will be true.

I'm not spending anything I don't have to, and as for obummercare, I've been working on my withholding so that there won't be any refund, in fact I hope to have a bill to pay at the end of the year, to which I will exclude the obummercare fine. They can kiss my ass...

Last of the Middle Class's picture

They're callint it the faithless recovery or some similar shit on fox. Absolutely incredible those guys can sit around with a straight face and run such B.S. No one dares to mention middle class is a gone M.F. tapped out.  What complete morons and propaganda.