Consumers Are Doing What They Do Best

Chart of the Week for December 13-19, 2002

Many questions have been raised regarding the ability and willingness of consumers to continue spending. The most frequently cited risks are a lack of pent up demand, a weak labor market and a high level of consumer debt. Although these could crimp spending in the future, they have had little impact so far. Excluding auto sales, consumer spending in November grew at its fastest year-over-year rate since January 2001. The strong housing market and record pace of mortgage refinancings, along with small but consistent wage gains, have offset a lack of pent up demand and weak labor market, and given consumers the means with which to do what they do best— spend.

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