Spending Only Down Because Of Labor Day Holiday

Consumer Spending Rolling Over?

Some think the consumer is doing fine. Only the data points that don’t adjust for the Labor Day holiday show recent weakness. Seasonal adjustments need to be made or you will be caught missing the obvious. We’re just trying to note the trends, not focus on small moves each week.

As you can see from the chart below, Chase consumer spending growth fell modestly to -6.5% in the week of September 13th. Commentators say the data is rolling over, but they are likely biased. They look at the stock market’s decline and try to formulate a narrative. Spending isn’t rolling over. There was a bump in growth the prior week because of Labor Day.

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That same bump and decline happened with mobility. We also saw the reverse in deaths from COVID-19 as they fell during the holiday and bumped higher afterwards. As you can see from the chart below, there was a blip in airline passenger numbers. 

Some investors thought we were finally seeing a turn in travel after months of barely improving. That will change once Abbott’s rapid tests become available. Expecting an improvement in flying before then is foolhardy.

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On September 14th, Rennova Health announced that it purchased and took delivery of equipment to provide rapid testing for COVID-19 at 2 hospitals in Tennessee and one clinic in rural Kentucky. Testing will begin this month in all 3 facilities. It seems like Abbott’s rollout has been slow. They promised 10 million tests in September and 50 million in October. There are only 1.5 weeks left in September and we have no data on how many have gone out.

Stronger Consumer Sentiment

September consumer sentiment index from the University of Michigan improved which supports the strong reading from the Bloomberg consumer comfort index. This supports the point that consumers are doing better. Weakness in spending after the holiday is temporary. 

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