Tuesday, August 17, 2010

Life in the Great Recession

Life in the Great Recession by Rodney Johnson

In the hundreds or thousands of presentations that I gave during the boom years, one question kept coming up: “What should we be watching to know when we have turned the corner into the long winter?” The answer was simple consumer expenditures. The Bureau of Economic Analysis tracks consumer expenditures quarterly. Adjusted for inflation, they are shown in Chart 1 from 1990 through March 2010. You will notice that, except for a brief time in 1991-92, consumption expenditures consistently have gone up until the recent downturn. This happened through the Russian bond default, the tech bubble busting, 9/11, Hurricane Katrina, and so on. We just kept spending more, but now we’ve reined ourselves in. We are spending less.

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