In a broader context, deceleration in the consumer spending growth-rate does not in itself predict an oncoming recession. We typically see a slowing in overall consumer spending plans in the latter part of the year before it gains momentum in the new year.
Rather, a steady decline into negative territory, accelerating as it goes lower, would be more indicative of a potentially damaging economic crisis and give us reason to assess whether an onset of a recession was imminent.
To better understand recessionary conditions, it’s instructive to review our data from 2008. At the time, the negative level in August 2008 (net -20) – 30 points worse than the current number – was a point in the trend between the official start of the recession (January 2008) and the GDP bottom in Q2 2009).
Over the last decade we’ve seen single data points that have registered negatively, such as January 2019 (net -6), but those are mostly emotion-driven reactions to specific events with minimally lasting effects
We’ve also seen longer stretches in negative territory such as the period from September 2015 to May 2016. With an average reading of only net -4, that downturn never compounded and was instead part of the ebb and flow of one of the weakest recoveries on the books.
For additional insight into the factors weighing on consumers’ sentiment and behavior, we asked about the macroeconomic forces posing the greatest threat to personal finances. The two main threats continue to be trade war/tariffs (47%) and US stock market performance (42%), with concern over both increasing since the last month.