Sunday, April 3, 2011

Consumer Spending Trends

The Economist posted a chart developed by Julia Coronado of BNP Paribas that illustrates why the economy stubbornly refuses to exhibit a recovery-like bounce.  Ms. Corado says in her notes, "While consumers are spending there has been no sign of pent up demand. Real consumer spending on goods fell off its pre-2008 trend line during the recession and has since resumed its former pace with no indications that a surge in spending to make up for lost time is imminent."

For the mailing industry, the trend in consumer spending presents both good and bad news.   The good news is that mail that grows with consumer demand (advertising) should grow at a rate approaching the growth rate prior to the recession, subject to the challenges of increased electronic competition.   The bad news is that volumes would not soon bounce back to the pre-recession trends even if electronic competition did not exist.

I urge readers to link to the Economist, Economics blog to take a look at the chart and read Ms. Corado's comments on how trends in consumer spending and employment will impact inflation and how they should impact economic policy.

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