Consumer spending plunged in September by the largest amount in nine months, reflecting the end of the government's Cash for Clunkers auto sales program. Incomes, the fuel for future spending, were flat.As I said yesterday, this bit of data seems to show just how much government intervention helped keep the U.S. economy afloat during the 3rd quarter. The American economy is built on consumer spending and it reflects some 70% of it. With so many living on much reduced incomes or just living off what little savings they have managed to accrue I don't expect the 4th quarter to show any improvement and fully expect it to worsen.
While the government reported that the overall economy grew in the July-September period, signaling the end of the worst recession in seven decades, the weakness in spending and incomes as the quarter ended underscores the fragility of the recovery.
We are seeing the legacy of Bush\Cheney play itself out in spades. President Obama inherited a huge mess and I really don't think a large number of Americans realize how big a mess it really is. Even more troubling is the realization that Republicans and Democrats both are guilty helping to create the mess and that GOP is doing everything it can to kill any chance of a quick recovery. It's gonna get uglier.