U.S. consumer spending totaled $89 per day in July, unchanged from the $90 in June and May, according to Gallup Daily tracking interviews of more than 14,000 Americans.
Spending began the year at $80 in January and $83 in February. Consumers spent more in March, an average of $89, reflecting a normally expected seasonal spring increase in sales. But consumer spending has remained at that level since - even with normally positive seasonal factors such as warmer weather, home improvement projects and spring and summer travel. Longer-term, Americans' self-reported spending is much stronger than it was from late 2008 to late 2011, but still trails early 2008, before the recession gained steam.
The flat spending levels of the past five months are consistent with the weak GDP reports of the past three quarters and the lack of improvement Gallup finds in its Payroll to Population employment rate over the past couple of years. Gallup's consumer spending data are essentially a discretionary spending measure and are generally more closely related to chain-store sales and online sales than overall retail sales.
Lower- and middle-income spending averaged $78 per day in July, similar to the $77 per day in June and May, and the $75 in March. Spending by this group has been in a relatively narrow range throughout 2013, from a high of $78 last month to a low of $70 in January.
Upper-income spending inched up to $158 in July, from $143 in June and $150 in May. But the upper-income spending data tend to be more volatile because of the smaller sample sizes involved, and the trend seems to be essentially flat over the past five months - with a peak of $166 in March and a low of $140 in April.
Spending was up in the East in July, likely related to the Wall Street boom and improving conditions for financial institutions. Spending, however, dropped in the South - possibly related to some slowing in the energy industry in this part of the country in recent months. It also dropped in the Midwest, which seems to be suffering from a slowdown in manufacturing.
Average daily consumer spending was highest in the East ($98) and West ($97) in July, while the South came in third at $88 and the Midwest last at $76. The West stayed in the lead by essentially matching its June spending level of $98, as it enjoys an improving housing market in many cities.
Even as Wall Street is reaching new record highs, questions remain about the strength of the Main Street economy.
Gallup's self-reported spending results for July suggest the underlying economy remains fragile. This aligns with recent weak GDP reports, the lack of increase in full-time jobs with employers and the slight decline in economic confidence.
At this point, Gallup's economic data do not support the idea of a significantly improving economy in the second half of the year, suggesting retailers may be disappointed with the Back-to-School spending season. The consumer spending outlook appears best in the East and the West, moderate in the South and not so good in the Midwest.