Real retails sales are off roughly 9% for the 9th month in row. When will they rebound? Perhaps never.


Take a look at a chart of consumption spending as percentage of GDP.


The norm that prevailed throughout the 50s, 60 and 70s was roughly 62%. A little less than two thirds of our economy was accounted for by consumer spending.

Beginning in the early eighties that percentage started to rise, reaching its recent plateau around 2001. Why this happened is an interesting question in its own right, but I want to think about is whether or not the pattern is reversing itself quickly as it appeared to do in the late 1940s.

Our current retail spending is roughly 9% lower than last year. If we take the consumption spending  from the last 20 years and lower it 9% we get this.


A reduction in consumer spending by 9% takes us back to the levels that prevailed for decades. The question is that if consumer spending is going to follow a permanently lower path, what is going to take up the slack?