Income, Spending Drop Despite Stimulus ; Consumers Gird for Recession

Summary

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Consumer spending slowed dramatically as personal incomes plunged in July, reflecting the short-lived impact of $93 billion in economic stimulus checks.

Even as spending decreased, prices continued to increase - suggesting that overall consumption could decline in the third quarter. If consumption declines, the breadth and depth of any recession would likely be greater than the 2001 downturn, when consumption continued to grow throughout the recession.

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Income, Spending Drop Despite Stimulus ; Consumers Gird for Recession

Many economists are predicting the U.S. economy will slip into recession by the time voters cast their ballots in November.

The last two times a recession occurred during a presidential election year ...

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