Strong Spending Still Defies Economic Gravity ; Consumer Confidence in Future Economic Conditions Fell Slightly in a Survey Last Week
Mark Trumbull writer of The Christian Science Monitor, The Christian Science Monitor
Outside Fenway Park, the sales of pizza and pennants are a barometer not just of early-season Red Sox passion but also of consumer pep. So far, the spending public seems to be defying gravity like a Tim Wakefield knuckle ball.
"This year should be fine, as long as the team does well," says Jeff Swartz, manager of the sprawling Red Sox Team Store across from the ballpark. Even though it's still hours before game time, the store is doing brisk trade in jerseys, caps, and sweat shirts.
From Fenway to Fresno, consumer spending is strong, but that momentum now faces crucial tests. Fuel prices are soaring. Home prices, a key source of family wealth, are stalling. Mortgage rates are climbing.
That means the economy is at a point of inflection. Where it goes from here is up to consumers, because their spending makes up 70 percent of US economic activity.
Most economists expect some slowdown, but not an outright reversal of direction. But millions of households may feel squeezed in the process.
"We're going from above average to a little bit below average," in terms of economic growth, predicts Ken Goldstein, an economist at the Conference Board, a business research group in New York.
"It isn't that bad," he says, except that it comes as many workers worry about whether their pay will keep pace with inflation. "The concern ... [is] that their pay isn't growing all that fast, and probably isn't going to grow all that fast."
A survey of consumer sentiment late last week highlighted the feelings of uncertainty - and the prospect of a slowdown.
The University of Michigan survey of consumer sentiment for April, at a reading of 89.2, was virtually unchanged from March. The portion of the index that measures present conditions rose to 111, but the part that measures confidence in future conditions fell a notch, to 75.
Other parts of the economy - exports and investment by businesses - can probably pick up some of the slack if consumer activity falls below a typical pace. And for now, spending by households remains solid.
A government report on retail sales, also released last week, showed purchases up 0.6 percent in March.
On the pavement of Yawkey Way, as fans wait for a glimpse of arriving players, they are also doing their part to keep retailers busy - buying sausages, programs, and parking spaces.
Dave Luft and Lely Gulledge came to Fenway from the nether reaches of "Red Sox nation."
He works at Dunkin' Donuts in Hartford, Conn. She's studying criminal justice in Newport, R.I. Are they worried about the job market, the housing market, or other pocketbook concerns?
"Just gas," Mr. Luft says.
As they drive between Hartford and Newport, they both notice the dent that the recent price jump has put in their wallets. …