Stefanie Kammerman, the Stock Whisperer, to tell you the Whisper of the Week: GLD and SLV in my week...
Stocks fall on data showing that the U.S. consumer is cutting back on spending
08/02/2011 6:41 pm EST
For spending to drop while income is still edging up is a bad sign. This usually indicates that consumers are starting to rein in spending because they anticipate the economy will get worse in the months ahead. Of course, that kind of loss of confidence pretty much guarantees that the economy will indeed worsen. My sense that the consumer is pulling back in anticipation that the economy is going to get worse finds confirmation in the June increase in the savings rate to 5.4% in June from 5.0% in May. The savings rate often goes up when unemployment is high and either not falling or creeping higher and consumers are worried about their jobs. A higher savings rate will certainly contribute to the continued deleveraging of U.S. households, but it’s not good news for consumer spending in the months ahead.