Consumer spending shows tepid growth
STEVE CHIOTAKIS: Americans are making a little more money and are shelling out more of it too, yes. The Commerce Department reported personal spending was up four-tenths of a percent in April. But we’re spending almost all of it on more expensive gasoline and food. When adjusted for inflation the rise in spending is pretty much nil.
Jill Schlesinger is editor-at-large at CBS/MoneyWatch. She’s with us live from New York as she is every Friday. Good morning Jill.
JILL SCHLESINGER: Good morning.
CHIOTAKIS: What do these numbers say about American consumers?
SCHLESINGER: Well, I think they are pretty underwhelming. I mean it’s the tenth straight month of increased spending. But as you said, we’re spending more of our money on gas and food and you know, what we’re really knowing here is that we’re spending more in the economy but we’re not getting back as much in return. And that’s not good.
CHIOTAKIS: We got the revision, Jill to the GDP yesterday, still pretty tepid at 1.8 percent annual growth. What happened to this supposed recovery we were experiencing?
SCHLESINGER: Well in the first quarter we had the old culprit — bad weather. We always use that when things don’t look good. We also had a pull back in defense spending and a spike in oil prices. All of those things siphon money away from the American pocketbook. Add to those concerns big picture issues — rough U.S. employment and housing market, shaky state and local government finances and lingering worries over the European debt issues and you have a classic slowdown.
CHIOTAKIS: So all right, what can we do about it? What can we do about this slow down? Is it political, or can anything really be done Jill?
SCHLESINGER: Well, I think the Fed could continue its program of buying bonds, but I don’t think that’s going to actually create a real boost, so I wouldn’t vote for that one. Politicians, they could renew some of last years temporary tax cuts and credits, but at the end of the day, I think this renewed conversation about the nation’s debt and deficit problems are going to trump any major government action that would spur economic growth. So it looks like we’re going to be in a classic slow growth mode at least for another quarter.
SCHLESINGER: Jill Schlesinger from CBS/MoneyWatch, Jill thanks.
CHIOTAKIS: Thank you.
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