The recession that we’ve experienced has set records on so many levels. But consumer spending is really dominant in our economy. And, says N.C. State University economist Mike Walden, there have been some unfortunate records set regarding consumer spending during the recession.
“They’ve been bad records. Our friends at the New York Federal Reserve recently calculated discretionary consumer spending has fallen twice as much in this recession as in any recession in the last 50 years.
“Now, what do they mean by discretionary consumer spending? Well, as you might expect these are, this is spending that you and I and all of our fellow consumers do on items that we necessarily don’t have to have. So it would include things like spending on recreation, spending on going out to eat at restaurants. Some part of transportation spending, for example.
“And what the economists at New York Fed estimated was that this kind of spending by consumers went down 7 percent during the recession. The biggest post-World War II drop was 3 percent — so, more than twice as much as the previous high.
“And unfortunately to date, that kind of spending, that kind of discretionary spending by consumers has not come back. And so I think this tells us a big reason why the economy has been very sluggish — simply because the consumers aren’t out there spending on recreational items, on restaurants, et cetera, like they typically do.”