Wherever we turn to in the media today, we hear or read the U.S. economy is witnessing a period of economic growth. The media and politicians cite an improving luxury car market, rising real estate prices, and jobs growth.
On the contrary, and as I have been writing in these pages for months (if not years), economic growth in the U.S. economy can only occur when consumers are optimistic and feel better about spending; the opposite of that is happening right now.
According to the U.S. Department of Commerce, sales at restaurants and bars in the U.S. economy plummeted the most in June since February of 2008. Sales at restaurants and bars also witnessed a decline in May. (Source: Wall Street Journal, July 15, 2013.)
In times of economic growth, consumers go out and spend money. As purchases at restaurants and bars are discretionary, this tells me consumers in the U.S. either don’t really want to spend or don’t have much to spend.
U.S. companies are also painting a picture of slowing consumer spending. Consider General Electric Company (NYSE/GE), one of the pioneer companies in the U.S. economy. General Electric (GE) reported second-quarter earnings that beat estimates, but the company’s revenues declined two percent from the same period a year ago. (Source: General Electric Company web site, July 19, 2013.) In times of economic growth, you want to see earnings increasing with revenues.
Why aren’t the consumers in the U.S. economy spending?
Wages of employees in the U.S. economy in real terms, adjusted for inflation, are declining. In June, real average weekly earnings for all employees in the U.S. declined 0.1% from May. (Source: Bureau of Labor Statistics, July 16, 2013.)
The jobs market in the U.S. economy is still weak. The “official” figures do not include people who have given up looking for work and those who want full-time work but can only get part-time work. And the majority of job creation since the credit crisis hit has been in the low-wage-paying sectors.
Troubles for the average joe just don’t end here. Right now, we are seeing rising oil prices—and this will put more pressure on consumer spending in the U.S.
So what’s the truth of the matter? There is no real economic growth in the U.S. economy