Consumer spending, which accounts for about 70 percent of US economic activity, is critical to the overall health of the economy. For years, robust spending on everything from homes to clothes kept the economy afloat. But Americans are paying heavily for their habits, saddled with record amounts of debt. Coupled with increasing concerns about rising gasoline prices, growing unemployment, and a prolonged housing slump, that may cause consumers to finally stop shopping this year. That, some economists say, would likely push the nation into a recession.
The forecasts are certainly bleak. Economists at Goldman Sachs yesterday joined those at Merrill Lynch and Morgan Stanley in predicting a recession this year. And growth in consumer spending is expected to drop to 1.9 percent from 2.9 percent in 2007, according to Nigel Gault, an economist at Global Insight in Lexington. The last time spending slowed that much was in 2001, and the only time spending growth was lower than 1.9 percent was in 1991. In both years, the country was in the middle of a recession, typically defined as two quarters of economic contraction.
"The consumer is really on the ropes," Gault said.
One of the first signs of a major slowdown in consumer spending was in stores across the country. Merchants, used to comfortable profits for the holiday season, slogged through this last one with aggressive promotions. - The Boston Globe
Or maybe people are just going the anti-consumerism route.