Consumers Are Not All The Same: The Averages Can Hide the Real Story (2010.06)

Allan Seychuk, CFA

Following the devastation wrought by the 2008 financial crisis, a consensus emerged that the United States had changed in profound ways. This widespread view held that, after years of overspending, largely using borrowed money, U.S. households had entered a "New Normal" environment characterized by more saving, less borrowing, and far, far less shopping. With consumer spending accounting for about 70% of U.S. GDP, the implications of the "New Normal" were that a self-sustaining recovery would be slow in coming and that it would be underwhelming once it arrived. So far this has not been the case. This work examines one likely reason why not.

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