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The Wall Street Journal has a story about weak personal consumption trends during the past few months, which were up “just 0.2% in both January and February on a seasonally adjusted basis, according to Commerce Department data. This was slower than a 0.4% rise in personal incomes in both months, suggesting Americans are saving more. A separate data series showed retail sales fell for the third month in a row in February, disappointing economists who had estimated a slight gain for the month.”

These numbers all raise an issue: “The labor market is tightening, wages are rising and consumers’ take-home pay is being boosted by tax cuts.” And so, the Journal asks, “ Why, then, isn’t spending stronger?”

The reasons may simply be cyclical, but there also may be something else at play - “tightened lending standards by credit card, auto and other lenders may be squeezing consumer finances.” At the same time, “consumers with lower credit scores will find it harder to secure auto loans or new credit-card lines. One naturally would expect to see some impact on spending despite healthy incomes.”
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