Consumer Spending Is Negative In Real Terms
My view since 2022 has been that Consumer spend is weakening and is negative in real terms.
The first chart below measures the Y-o-Y percentage change in Consumer spend based upon Bank of America credit and debit card data.
The chart includes the benefits consumers received as a result of the CARES Act, including stimulus checks, debt stays, the BTFP and the Employee Retention Act.
Despite the Federal Government propping up the Consumer and the U.S. Economy at large, Consumer spending is negative in real terms when overlayed with CPI data.
The second chart is the Y-o-Y percentage change in CPI. CPI in my view is grossly understated. Yet, even the artificially suppressed CPI figure makes my point, which is to say that prices are increasing at a greater rate than Consumer spend is increasing.
Therefore, Consumer unit purchases are declining. Consumers are buying less “stuff”. Real Consumer spend is negative.
The fact that prices have consistently increased by such a large amount for the past several years is the only reason why Consumer spend is “up” in nominal terms. Spend is up, yet unit sales are down. The U.S. Economy is sick.
