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Anticipating Consumer Slow Downs
Posted By Barry Ritholtz On February 10, 2006 @ 8:45 am In Consumer Spending,Investing,Wages & Income | Comments Disabled
Today, we go back even further up the causation ladder, to look at the question "How can we anticipate when Consumer Spending is about to slow?"
It turns out there’s a reliable tell that gives lots of warning prior to a Consumer Spending slowdown: Real hourly earnings.
Source: Joseph H. Ellis, Ahead of the Curve 
Real hourly earnings downtrends of a year or longer have been a generally reliable leading indicator of consumer-spending downtrends. Real hourly earnings gave particularly notable advance warning of the 2000–2002 economic downturn.
Real hourly earnings are reported on a pretax basis. Therefore, in the mid-1980s and 2003-early 2004, strong gains in consumer spending despite slowing real earnings were an anomaly reflecting federal tax cuts in those periods.
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2006/02/anticipating-consumer-slow-downs/
URLs in this post:
 increasingly leveraged: http://bigpicture.typepad.com/comments/2006/02/consumer_grows_.html
 consumer spending slowdowns, and Bear Markets.: http://bigpicture.typepad.com/comments/2006/02/consumer_spendi.html
 Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/w1007.jpg
 Joseph H. Ellis, Ahead of the Curve: http://www.aheadofthecurve-thebook.com/10-07.html
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